United Engineers set to sell automotive business for $455m

It’s moving away from non-core assets.

Mainboard-listed United Engineers Limited today unveiled its plans to sell its automotive business to luxury car distributor StarChase Motorsports for a total consideration of $455 million.

The deal will be made via UEL’s indirect-owned subsidiary, WBL Corporation Limited. WBL will sell the entire issued and paid-up share capital Wearnes Automotive Pte. Ltd. and Associated Motor Industries.

“The Proposed Disposal is in line with the Company’s strategic review and objective of streamlining activities and businesses across the Group. The Proposed Disposal is part of the plan to exit from non-strategic or non-core operations of WBL and WBL’s subsidiaries, and to enhance capital management and unlock value for the Company’s shareholders,” noted a release from UEL.

Here’s more from UEL:

The consideration for the Proposed Disposal is $455 million on a debt-free, cash-free basis (“Consideration”). The Consideration will take into account adjustments for, amongst other things, estimated net indebtedness and estimated changes in working capital and a final adjustment will be carried out after closing in accordance with the terms of the SPA and Thai APA.

The Consideration was determined between the Share Seller and Share Purchaser, and the Asset Seller and Asset Purchaser, at arm’s length, on a willing buyer willing seller basis following a formal sale process, after taking into account the book value of the disposed assets and liabilities, the valuation of other publicly-listed peers and the performance of the business over the past 3 years.

The net proceeds from the Proposed Disposal are intended to be used to repay external borrowings and as general working capital of the Group. This would further strengthen the Group’s balance sheet and enhance the Group’s financial flexibility.