* Companies unable to agree on terms - Smiths
* Smiths says continues to review all options
* Smiths shares down 0.6 percent (Adds details on Sky News report, background)
By Justin George Varghese
Sept 13 (Reuters) - British engineering firm Smiths Group Plc said on Thursday talks with U.S.-based ICU Medical Inc over a possible 7 billion pound ($9.2 billion) merger of their healthcare businesses had fallen through.
The company's largest unit, Smiths Medical, has been struggling of late, after being hit by delays to new product launches, some products losing certifications under new regulation and the loss of two contracts in the United States.
Discussions have ended because the parties have been unable to agree on terms, Smiths said in a statement.
"The board recognised the complementary strengths of both businesses. However, it was important that any such combination did not undervalue Smiths Medical and its prospects," the company said.
In May, Smiths said it was in very early stage discussions about a potential combination of its medical division with ICU, in a statement that did not disclose any of the financial details under discussion.
Smiths, a provider of hospital equipment, industrial services and sensors to detect explosives, said it would continue to review all options for its businesses.
ICU Medical was not immediately available for comment outside business hours.
Smiths said in July it expected full-year revenue at its medical unit to drop 2 percent, but added its overall full-year performance would be in line with expectations.
ICU, which makes devices used in infusion therapy and oncology, has had a good track record of takeovers after it bought here top shareholder Pfizer Inc's infusion therapy business in 2016 and medical device maker Medical Australia Ltd late last year.
Sky News reported last month the two sides were close to abandoning the merger. bit.ly/2MoStI5
Smiths Group shares moved slightly lower following the news and were last down 0.6 percent at 15.58 pence. ICU Medical was flat in premarket trading on the Nasdaq.
According to the Sky News report, which cited banking sources, the deal talks prompted U.S. hospital-product maker Baxter International Inc to express interest in buying Smiths' medical unit.
$1 = 0.7651 pounds Reporting by Justin George Varghese in Bengaluru; additional reporting by Muvija M; Editing by Jan Harvey and Mark Potter