Last checked at 16 Jun 2008 07:00
De La Rue Plc
16 June 2008
DE LA RUE PLC ("DE LA RUE" or the "GROUP")
PROPOSED DISPOSAL OF CASH SYSTEMS
De La Rue today announces that it has entered into a conditional agreement for the sale of its Cash Systems business (excluding those activities relating to banknote sorters, the Cash Processing Solutions Division ("CPS")) to The Carlyle Group for a cash consideration of £360 million on a cash and debt free basis, subject to adjustment for a normalised level of working capital. The Disposal, which is conditional on, amongst other things, the approval of De La Rue's shareholders and the receipt of certain regulatory approvals, is expected to complete before the end of September 2008.
Following completion of the Disposal, it is intended to return approximately £460 million of capital to shareholders, equivalent to 305 pence per share. This total includes the £160 million return of capital previously announced with the preliminary results on 22 May 2008, which will now be returned as part of the return of capital and not via a special dividend.
De La Rue Chairman, Nicholas Brookes, said: "This announcement completes an important step in implementing the strategic review we initiated last November.
"The disposal of Cash Systems, in the more uncertain economic environment, reflects the quality of the business that we have built since 2004 and crystallises its value for our shareholders. We wish the business well under its new ownership.
"Going forward, the Group has a high quality business in Security Paper and Print, capable of providing Governments, Banks and international corporations with the highest levels of customer service to sustain strong growth in shareholder value."
Following completion of the Disposal, De La Rue intends to build on its position as a world leading manufacturer and supplier of banknote printing and banknote paper and to become the premier supplier to Central Banks, Governments and international corporations globally of security features and authentication systems and products used in payment and identity transactions.
1. Background
As announced on 22 May 2008, the conclusions of the strategic review initiated by De La Rue in November 2007 were as follows:
the strategy implemented by the Group since 2004 has created two market-leading divisions, each with strong management teams, reinvigorated product offerings and excellent prospects;
De La Rue's historic strength has been its relationships with Central Banks, Governments and international corporations through the Security Paper and Print Division ("SPPD") and these remain core to its success;
Cash Systems has been developed significantly in the last four years and is now a strong business in its own right, serving the retail/commercial banking sector;
De La Rue's two divisions are distinct entities operationally and there is little opportunity for synergies. They also serve different customer bases, the exception being CPS, which develops and supplies banknote sorters and cash optimisation software, largely to Central Banks; and
subject to achieving appropriate value, the Board should explore the sale of Cash Systems, excluding CPS*, as a possible route to crystallise shareholder value.
Expressions of interest for Cash Systems were therefore sought from a range of potential buyers. The Board believes that the terms agreed with The Carlyle Group recognise the quality of Cash Systems, the strength of its market positions particularly with the retail banks, its strong product range and its prospects.
* References to "Cash Systems" hereinafter are to Cash Systems excluding CPS
2. Information on Cash Systems
Cash Systems is a leading provider of cash handling technology solutions focused on authenticating, counting and sorting banknotes. Cash Systems comprises three operating divisions:
Branch Teller Automation (BTA) - this division provides teller automation solutions to financial institutions and other cash handling businesses across the globe. Its range of products includes teller automation machines for both dispensing and accepting cash, authenticating, sorting for fitness and counting and recycling, all supported by a service business.
Desktop Products (DTP) - this division produces a range of low-cost, easy-to-use coin and banknote counters for use in financial institutions and other cash intensive environments.
Original Equipment Manufacturer (OEM) - this division supplies dispensing mechanisms to manufacturers of automatic teller machines and for other cash dispenser applications, for example gaming ticket redemption machines and parking pay stations.
For the financial year ended 29 March 2008, Cash Systems reported revenue of £286.6 million and operating profit (after the allocation of central overheads of £7.9 million) of £35.5 million. The gross assets of Cash Systems as at 29 March 2008 were £127.1 million.
In the year ended