Trelleborg to Get $834 Million From Vibracoustic Stake Saleby
Closely-held Freudenberg to boost share in autoparts venture
Transaction based on enterprise value of business of EU1.8b
Trelleborg AB will sell its stake in an automotive anti-vibration joint venture to closely-held German partner Freudenberg SE for about 6.8 billion kronor ($834 million), boosting its balance sheet as the Swedish engineering company looks to invest in new deals.
The transaction, equivalent to about 25 kronor per Trelleborg share, will result in a capital gain of about 4 billion kronor, the company said in a statement on Thursday. Trelleborg also received a dividend of 1.4 billion kronor from the venture in December.
The disposal will help the company return to “a decent gearing” after it agreed to buy CGS Holding a.s. of the Czech Republic for 10.9 billion kronor in November, Chief Executive Officer Peter Nilsson said on a conference call. He called it “a clean and safe exit which is immediately balancing our balance sheet,” allowing Trelleborg to pursue further deals.
Trelleborg makes products such as seals and anti-vibration devices for a wide range of industries including ports, farming and medical equipment. The purchase of CGS makes it the third-largest supplier of tires for farm and forest vehicles, while last month the company bought a Dutch engineer that makes anti-vibration devices for ships.
“As Trelleborg has already stretched its balance sheet through the acquisition of CGS, we see this exit as positive,” Kepler Cheuvreux analyst Douglas Lindahl said in a note. The 8.2 billion kronor proceeds, including the dividend, was less than his forecast of 8.8 billion kronor, the analyst said.
The shares declined 0.3 percent to 154 kronor at 11:12 a.m. in Stockholm, valuing the company at 41.7 billion kronor. The stock has declined 6.7 percent in 2016, compared with a 5.8 percent decline on the OMX Stockholm Index.
TrelleborgVibracoustic specializes in reducing noise and vibration for passenger cars and commercial vehicles.