Latham, Freshfields lead as PE swoops for £2bn airport scanning business

Latham and Freshfields are advising on the £2 billion sale of Smiths Group’s security detection business to private equity giant CVC, marking one of the year’s biggest carve-outs in the UK industrials sector.

FTSE 100-listed Smiths has agreed to sell Smiths Detection, its airport-screening and threat-detection unit best known for baggage-scanning equipment and explosives detectors. The division is reportedly Smiths’ second-largest and generated nearly £1 billion in revenue in its latest financial year.

The sale advances Smiths’ plan to streamline the group and refocus on its industrial technology businesses, John Crane and Flex-Tek. The shift follows pressure from US activist investor Engine Capital earlier this year for the company to break itself up.

Advising

Latham & Watkins is acting for CVC - its second mandate for the buyout group in a week.

The US firm also advised CVC on the sale of UK-headquartered portfolio company Domestic & General - a large warranty provider for household appliances - to US buyer Asurion days earlier and has featured on several CVC deals this year, including its investment in mobile gaming company Dream Games, reportedly valued at almost $5 billion.

The Latham team was led by London partners Kem Ihenacho and Doug Abernethy, supported by a large cross-practice team spanning finance, IP, technology, tax, employment, regulatory, competition and real estate.

Freshfields is advising Smiths.

The firm previously advised CVC on its €14 billion IPO on Euronext Amsterdam last year but is on the opposite side of the table this time. London corporate partners Piers Prichard Jones and Stephen Hewes are leading the team acting for Smiths, alongside senior associate Lucy Cliff.