19 October 2011
Cobham AGREES DIVESTMENT OF ANALYTIC SOLUTIONS BUSINESS FOR US$350M
In its May 2011 Interim Management Statement, Cobham plc ('Cobham' or 'the Group') announced its intention to divest its Analytic Solutions business, which provides a range of scientific and engineering services to the US missile defence and national security markets. Changes to the US Government Organisational Conflict of Interest rules and the competitive intensity in its markets have diluted the strategic benefit to the Group of owning this business.
Following a thorough auction process, Cobham is pleased to announce that it has agreed to sell the business to the privately owned Parsons Corporation, an industry leader in systems oriented engineering and technology as well as project and construction management. The business is being sold for US$350m in cash, payable on completion, on a debt and cash free basis. Subject to regulatory approvals and other customary conditions to closing, the divestment is expected to complete before the end of 2011.
In the six months ended 30 June 2011, the Analytic Solutions business recorded revenue of US$144.3m, EBITDA of US$14.9m and operating profit of US$13.8m. The gross assets of the business, including goodwill and intangibles, were US$396m at 30 June 2011.
As expected, this transaction is dilutive to Group earnings by approximately 5% and Cobham will be looking for opportunities to reinvest the divestment proceeds in its remaining core markets, where it has real technological and competitive advantage and scale positions.
The Group estimates that after costs it will generate on completion a gain on sale of approximately US$20m, after taking into account goodwill and all other intangibles. The cash proceeds of the divestment, together with distributions from the business received to date, also exceed the original cash cost of acquisition.
Andy Stevens, Cobham Chief Executive Officer, said:
"The divestment of the Analytic Solutions business is a significant step in line with our strategy of focusing on those markets where we have scale and technology differentiation.
"We believe this transaction is a good outcome for both Cobham, as it fully preserves shareholder value and financial flexibility, and for the Analytic Solutions business which has been sold to an owner who can offer new opportunities to the business and to its employees."
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Andy Stevens, Chief Executive Officer +44 (0)1202 882020
Warren Tucker, Chief Financial Officer +44 (0)1202 882020
Julian Wais, Director of Investor Relations +44 (0)1202 857998
Nick Claydon/Mike Harrison +44 (0)20 7404 5959
1. Cobham specialises in meeting the insatiable demand for data, connectivity and bandwidth in defence, security and commercial environments. Offering a technically diverse and innovative range of technologies and services, the Group protects lives and livelihoods, responding to customer needs with agility that differentiates it. The most important thing we build is trust. Employing more than 11,000 people on five continents, the Group has customers and partners in over 100 countries and annual revenue of some £1.9bn / $3bn.
2. Cobham's exclusive financial advisor on the transaction was Stone Key Partners LLC and its legal advisor was Hogan Lovells US LLP.
3. This document contains 'forward-looking statements' with respect to the financial condition, results of operations and business of Cobham and to certain of Cobham's plans and objectives with respect to these items.
Forward-looking statements are sometimes but not always identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'should', 'expects', 'believes', 'intends', 'plans', 'targets', 'goal', or 'estimates'. By their very nature, forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may or will occur in the future.
There are various factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, changes in the economies, political situations and markets in which the Group operates; changes in government priorities due to programme reviews or revisions to strategic objectives; changes in the regulatory or competition frameworks in which the Group operates; the impact of legal or other proceedings against or which affect the Group; changes to or delays in programmes in which the Group is involved; the completion of acquisitions and divestitures and changes in exchange rates.
All written or verbal forward-looking statements, made in this document or made subsequently, which are attributable to Cobham or any other member of the Group or persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. Cobham does not intend to update these forward-looking statements.