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Key Points:
- De La Rue is selling its Authentication Division to Crane NXT for £300 million, with 5% held in escrow for 18 months.
- The deal will help De La Rue repay debts and reduce its pension scheme deficit by contributing £30 million upfront and another £12.5 million by 2027.
- The company will focus on its profitable Currency Division, expecting to complete the sale in early 2025.
De La Rue plc (LSE:DLAR), a globally recognized leader in security printing and anti-counterfeiting technologies, has announced the sale of its Authentication Division to Crane NXT, Co. for a cash consideration of £300 million. This deal marks a strategic move for the company, as it seeks to streamline operations and strengthen its financial position by unlocking the value inherent in its Authentication Division. The transaction, subject to regulatory approvals and certain conditions, is expected to close in the first half of 2025.
Key Transaction Details
The Authentication Division sale has been structured to provide significant financial benefits to De La Rue, with 5% of the £300 million enterprise value being held in escrow for up to 18 months after the transaction’s completion. This sale follows a comprehensive and wide-reaching process initiated by De La Rue’s Board, which explored various options for the future of the division. Crane NXT was selected as the buyer due to its strong market position, especially after its acquisition of OpSec, a company known for its authentication and brand protection services. The Board believes that Crane NXT is the right fit for the division, ensuring the continued growth and stability of its operations, people, and customer base.
In terms of the financial implications, De La Rue will use the proceeds to enhance its balance sheet and reduce its financial liabilities. The cash injection will allow the company to fully repay its revolving credit facility, moving the company into a net cash position, which is a significant shift towards financial resilience. Furthermore, the sale will also address legacy issues, with a £30 million payment towards reducing the deficit of De La Rue’s defined benefit pension scheme upon completion. This will be followed by an additional £12.5 million in contributions towards the pension scheme, scheduled until 2027.
Financial Flexibility and Strategic Focus
By achieving a net cash position, De La Rue will have greater financial flexibility. The company is expected to use this strengthened position to focus on maximizing the value of its Currency Division, a profitable and market-leading segment within the group. This renewed focus on its core Currency Division will benefit shareholders and stakeholders alike, as De La Rue aims to position itself as a more resilient and efficient business in the long term.
One of the key conditions for the transaction to move forward includes the need for a reorganization to separate the Authentication Division into its own entity, which will be transferred to Crane NXT upon completion. Additionally, the deal is subject to obtaining the necessary antitrust approvals to ensure compliance with regulatory requirements.
