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NUREMBERG (dpa-AFX) – The ailing automotive supplier LEONI is coming to its conversion further ahead. A buyer was found for a unit of the cable division that had been up for sale for some time. Leoni announced on Friday in Nuremberg that the company had signed a binding agreement with the US group Bizlink on the sale of the division that produces cables for industry (Industrial Solutions). The transaction is expected to be completed in early 2022. During the night, the company had already announced that it was about to reach an agreement. The auto supplier’s share, which was recently under pressure, rose significantly in a weak environment.
The affected activities, which are no longer part of the company’s core business, are valued at around 450 million euros and achieved sales of around 430 million euros in 2020. “The expected inflow of funds after deducting, among other things, financial liabilities and pension costs is more than 300 million euros and is to be used to strengthen liquidity.” The part of the company sold produces cables for various industries at 20 locations in ten countries with around 3000 employees. The core business, the production of wiring systems for the automotive industry, will remain unaffected by the sale.
The transaction will help improve financial stability, it said in continue the message. The sale increases earnings before interest and taxes (Ebit) by 200 million euros. “The completion of the sale still requires the approval of the Leoni financing banks.” In addition, the is subject to the usual closing conditions such as merger control and investment review. This should be done by the beginning of 2022.
On the stock exchange, the announced sale caused price gains in a weak market. The shares, which were previously listed in the MDAX and SDAX , increased their profits after the announcement the completion of the transaction. Most recently, a plus of a little more than five percent to 14.34 euros was on the price board. The price has thus stabilized after the latest correction, which had pushed the share back from an interim high of EUR 18.50 in August to almost EUR 13.
Since the company was already in a deep crisis before Corona, the share has been on a downward slide for years. From the record high of just over 66 euros in January 2018, it went down to 4.30 euros just under a year ago. But the austerity measures that had been initiated and the restructuring that had been announced caused a change in sentiment. Despite the recent recovery, the company is worth 470 million euros on the stock exchange and is therefore no longer represented in one of the Deutsche Börse selection indices.
The The sale of the Business Solutions division is part of the plan to part with various units of the cable division (WCS). A complete sale was prevented last year, among other things, by the corona turbulence on the capital market. Leoni concentrates entirely on the larger wiring systems division (WSD), which is in the red, but according to management, promises better returns in the medium term.
In the first half of the year, the division’s sales rose by more than half to around 1.66 billion euros. In addition, the loss before interest and taxes (EBIT) was reduced from 145 million euros in the first six months of 2020 to 19 million euros. Before special effects for the savings program, costs for corona measures and proportionate costs for refinancing the group, the area was even operationally profitable.
In During the Corona crisis, Leoni had to refinance itself, among other things, with a state-guaranteed loan of 330 million euros. Most recently, Leoni did not expect to be able to repay this debt by mid-2022. Therefore, this loan is now one of the long-term financial debt of just under 1.6 billion. Leoni would get rid of part of this through the planned sale of the Business Solutions unit.
Leoni employed almost 102,000 people worldwide in the middle of the year – the majority of them with almost 94,000 in the wiring systems division. The anchor shareholder is the Austrian motorcycle manufacturer Pierer, which only increased its stake in April from around 10 percent to more than 15 percent. At that time, major shareholder Stefan Pierer had asked in an interview with the Bloomberg news agency that Leoni had to become more focused and faster./zb/ngu/jha/he
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