Premier Farnell plc (“Premier Farnell”) today announces that, together with its wholly owned subsidiaries, Celdis Limited and Premier Farnell Corp., it has entered into a conditional agreement with respect to the sale of Akron Brass Holding Corp. (“Akron Brass”) to IDEX Corporation for cash consideration of US$224.2 million (the “Disposal”).
Total consideration of US$224.2 million (£153.8 million), payable in cash on completion, subject to customary adjustments.
Represents an attractive enterprise valuation of approximately 8.8x Akron Brass FY15 EBITDA.
The Disposal will enable further focus on executing the initiatives identified as part of its operational review to restore growth in profitability in FY17 and provide increased financial flexibility to pursue growth opportunities within the core electronics distribution business.
Net cash proceeds arising from the Disposal will be used to reduce Premier Farnell’s existing indebtedness and to redeem its preference shares.
As announced on 17 September 2015, the Board’s dividend policy is to target a dividend cover in the range of 1.5x to 2.0x; the Board intends to maintain this policy following the Disposal.
Completion is expected by the end of March 2016.
The Disposal is a Class 1 transaction for Premier Farnell under the Listing Rules and is therefore conditional, amongst other things, upon the approval of shareholders. A circular containing further details of the Disposal and the notice convening a general meeting will be sent to Premier Farnell shareholders in due course.
Mark Whiteling, Premier Farnell Interim Chief Executive, said:
“Following the completion of the operational review and the conclusions announced in December 2015, the sale of Akron Brass marks the next important milestone in the strategic refocusing of Premier Farnell. The review confirmed that there are significant opportunities to improve the operational and financial performance of Premier Farnell. The sale of Akron Brass will enable us to focus on executing the initiatives identified as part of our review in order to restore growth in profitability in FY17.”
Following the year end on 31 January, the FY16 profit outcome is expected to be broadly in line with recent guidance.
Lazard & Co., Limited (“Lazard”) is acting as lead financial adviser in relation to the Disposal. Barclays Bank PLC, acting through its Investment Bank (“Barclays”) is acting as sponsor and financial adviser to Premier Farnell in relation to the Disposal.
This summary should be read in conjunction with the full text of this announcement.
Premier Farnell expects to announce its preliminary results for the year ended 31 January 2016 on 17 March 2016.