OC Oerlikon Corp. (OERL), the world’s largest maker of textile machinery, won’t seek to sell more units after announcing the disposal of its solar and natural- fibers divisions, Chief Executive Officer Michael Buscher said.
Oerlikon agreed to sell its natural-fibers and textile- components units, with an enterprise value of 650 million francs ($703 million), to Chinese investor Pan Xueping’s Jinsheng Group in Buscher’s biggest divestment yet. The deal, announced yesterday, will bring proceeds of 450 million francs to 500 million francs to Pfaeffikon, Switzerland-based Oerlikon, the CEO said.
“This is a strategic transformation of the business,” Buscher said today in a phone interview, adding that he’s now happy with Oerlikon’s divisional structure. “We see more value in further developing the units we have and reducing complexity.”
The sale is Buscher’s most decisive step since taking over in 2010, moving Oerlikon away from its traditional machinery base. Buscher completed the sale of a solar unit to Tokyo Electron Ltd. (8035) last week and divested other peripheral units, including a smaller textile-equipment business, in July.
Oerlikon shares rose as much as 7.4 percent and were up 1.5 percent at 10.25 francs at 1:43 p.m. They have more than doubled this year.
The engineering firm, whose largest shareholder is Russian billionaire Viktor Vekselberg, the world’s 42nd-richest man, has climbed in value to 3.3 billion francs. That compares to about 1.7 billion francs a year ago.
Oerlikon acquired natural-fiber machinery and textile- component businesses in 2006 when it bought Saurer AG in a 1.32- billion franc deal led by Austrian investors Ronny Pecik and Georg Stumpf, the controlling shareholders at the time.
That acquisition included a gear unit that remains an Oerlikon division. The natural-fibers and textile components businesses will be renamed Saurer under Jinsheng.
Buscher is selling those assets after the natural-fibers unit suffered from declining margins amid slowing demand for cotton-spinning machinery. Oerlikon started talks with interested parties in mid-summer, Buscher said. He declined to give further details about the number or identity of bidders.
The units being sold accounted for about a quarter of Oerlikon’s 4.2 billion francs in revenue in 2011 and have about 3,800 employees, according to a statement yesterday. Oerlikon said it will focus on more profitable equipment to make man-made fibers, which account for 33 percent of sales.
Sharpening the focus will help Oerlikon put a value on its textile business and support the stock, Benjamin Glaeser, an analyst at Berenberg Bank in London, said yesterday before the divestment was announced.
“The market is applying a large valuation discount to Oerlikon’s textile business due to its natural-fiber exposure,” he said in a note to investors.
Oerlikon raised its full-year forecast after announcing the sale, predicting revenue growth to exceed 5 percent with an order intake close to last year’s level and an operating margin gain of about 1 percentage point on its previous outlook. The company said it expects to close the sale in the third quarter of next year.
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