Investing.com -- Shares of De La Rue (LON:DLAR) jumped on Tuesday after the company said that it has agreed to sell its Authentication Division to U.S.-based industrial technology firm Crane NXT (NYSE:CXT) for £300 million.
At 4:20 am (0820 GMT), De La Rue was trading 13.8% higher at £107.
The deal includes a cash consideration representing the enterprise value of the business, with 5% of the payment set to be held in escrow for up to 18 months after the deal closes.
The proposed sale is part of De La Rue's plans to reduce debt, with the proceeds aimed at repaying its revolving credit facility in full.
The company also plans to use £30 million of the funds for an accelerated contribution to reduce the deficit in its defined benefit pension scheme.
An additional £12.5 million will be paid into the pension scheme by 2027.
The sale to Crane NXT is expected to provide De La Rue with a net cash position on its balance sheet, significantly enhancing its ability to fund its legacy pension liabilities while strengthening its ongoing operations.
Crane NXT is considered a strong buyer for De La Rue’s Authentication Division, which focuses on providing anti-counterfeiting and traceability solutions.
The deal builds on Crane NXT’s recent acquisition of another authentication business, OpSec, and aligns with its strategic focus on security technology.
Completion of the transaction is subject to regulatory approvals and the reorganization of De La Rue’s operations to facilitate the separation of the Authentication Division.
The deal is expected to close in the first half of 2025.
“Completion of the sale will allow us to repay our existing revolving credit facility in full ahead of its maturity on 1 July 2025 and will provide a springboard to unlock further intrinsic value as we move to find a long-term funding solution for the Group's legacy defined benefit pension scheme,” said De La Rue’s chairman, Clive Whiley in an exchange filing.