Recently, following several months of rumors, Telit officially announced the sale of its automotive division for $105 million in cash. The purchaser is Chinese company TUS International. The deal is slated for completion by the end of the year.
Telit develops and produces products for communications between electronic devices (M2M), including Internet of Things (IoT) applications. The company's share price was up 3.5 percent in London trading after the deal was announced, pushing its market cap up to £223 million (NIS 1.1 billion). Despite Friday's surge, the current share price is 38 percent lower than a year ago.
In its report to the AIM exchange on Friday, Telit said that the deal would include the transfer of assets and employees from its R&D and sales departments deployed in a number of countries. Telit added that the division being sold had generated $63.2 million in revenue in 2017, and its 2017 adjusted EBITDA had amounted to $10.1 million, compared with $31.9 million in revenue and $2 million in EBITDA in 2016.
The automotive division made a $2.1 million after-tax profit in 2017, compared with a $1.9 million loss in 2016. Telit stated that with the completion of the deal, the proceeds would be used to reduce the company's $25 million debt and strengthen its balance sheet.
Telit entered the auto sector in late 2013 by acquiring activity in it from NXP Semiconductor for $9 million and proceeded to invest more in developing solutions in the sector. Late last year, when The Financial Times reported that Telit was planning to sell the division, the company confirmed the report and said that it was considering all of its activities in order to substantially streamline its business and reduce its cost base.
“The sale of the auto division is part of the business focus process the company has been undergoing for the past year,” said Yosi Fait, CEO, Telit. “This transaction will significantly reduce our debt and provide us with the financial flexibility to focus our resources and accelerate the integration of our hardware and IoT services product lines in order to strengthen our leading position in the end-to-end IoT solutions space. The world of companies and organizations - both industrial and commercial companies and government agencies - will implement an IoT strategy in the coming years in order to streamline, generate cash flow from new sources, and be innovative in service and product. Telit will be a leading provider helping various entities carry out this strategy.”
Telit finance director and chief corporate development officer Yariv Dafna led the deal together with the Rothschild & Co. investment bank as an exclusive financial advisor. Telit received legal advice from the CMS international law firm and from Yossi Weinstock, a partner in the corporate licensing group at the Pearl Cohen Zedek Latzer Baratz law firm.
Ken Briodagh is a writer and editor with more than a decade of experience under his belt. He is in love with technology and if he had his druthers would beta test everything from shoe phones to flying cars.Edited by
Ken Briodagh
