De La Rue agrees £300m sale of authentication division

15th Oct 2024 09:01

(Sharecast News) - De La Rue announced on Tuesday that it had agreed to sell its authentication division to Crane NXT for £300m, as part of a strategic move to unlock capital and strengthen its financial position.

The London-listed currency and security printing specialist said the cash consideration, representing its enterprise value, would see 5% held in escrow for up to 18 months after completion.

It said the deal followed an extensive process led by its board, which identified Crane NXT - a recent acquirer of OpSec - as an ideal buyer due to the strategic fit with the division's people and customers.

The proceeds from the sale would allow De La Rue to repay its existing revolving credit facility in full, reducing its leverage to a net cash position.

It said it also planned to pay £30m as an accelerated contribution to its defined benefit pension scheme, which would help address the scheme's deficit.

An additional £12.5m would be paid towards the pension scheme by April 2027, further reducing the deficit and aiding De La Rue in exploring a long-term solution for the scheme.

Completion of the deal was expected in the first half of 2025, pending regulatory approvals and the completion of a divisional reorganisation to separate the authentication division.

"The sale of our authentication division to Crane NXT represents a substantial step forward on our route to realise the underlying intrinsic value of the De La Rue business for the benefit of all stakeholders," said chairman Clive Whiley.

"We are delighted to reach agreement with a company with the stature of Crane NXT, with its complementary strengths and are confident that the authentication division will continue to build on its considerable successes over the past few years."

Whiley said completing the sale would allow De La Rue to repay its existing revolving credit facility in full ahead of its maturity on 1 July 2025, and provide a springboard to unlock further intrinsic value as it moved to find a long-term funding solution for its legacy defined benefit pension scheme.

"In addition, we will be able to focus fully on building and growing our world-leading currency business."

At 0847 BST, shares in De La Rue were up 17.02% at 110p.

Reporting by Josh White for Sharecast.com.