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Highlights
- Licence Agreement Talks: Equipmake is in advanced discussions with a major automotive supplier for a $6 million licensing deal, but there is no confirmation on timing.
- Strategic Review: The company has launched a strategic review, considering various options, including raising capital, finding a strategic partner, or exploring a sale/merger.
- Formal Sale Process: Equipmake has appointed PwC to oversee a formal sale process, under the guidelines of the Takeover Code, to evaluate potential offers.
Equipmake (LSE:EQIP), a leading provider of electrification technologies for the automotive, truck, bus, and specialty vehicle industries, has initiated a strategic review and formal sale process as part of its efforts to secure the company’s future. The announcement comes amid ongoing discussions regarding a potentially significant licensing agreement with a major automotive supplier, which could play a pivotal role in the company's financial outlook.
Progress on Potential Licence Agreement
Equipmake has been in advanced negotiations with a major automotive supplier regarding a licensing deal for its functional safety technology and systems integration capabilities, specifically for the commercial vehicle sector. The potential agreement, which has been under discussion for some time, is expected to involve $6 million (£4.6 million) in milestone payments over two years, along with future royalty revenues based on volume. However, as of the latest update, Equipmake has not received confirmation regarding the timing or finalization of the deal.
The company remains hopeful that the licence agreement will materialize, but it is also preparing for alternative scenarios to ensure continued business operations and strategic growth.
Strategic Review and Sale Process
Given the uncertainty surrounding the licence agreement and the company's current cash position, Equipmake’s board has determined that it is appropriate to initiate a formal review of its strategic options. The company’s cash reserves stand at approximately £1.9 million, which is expected to last until March 2025. Equipmake has no significant debt, apart from a few equipment finance lease agreements.
As part of the strategic review, the board will evaluate several potential outcomes, including:
- Raising Additional Equity: Seeking additional capital from existing and new investors to bolster financial resources.
- Strategic Partnerships: Identifying a partner to support the company’s growth and improve its balance sheet strength.
- Sale or Merger: Considering the sale of the company or a merger with another public entity under a formal sale process.
- Ongoing Review of Strategy: Continuously reassessing the company's strategy, cost structure, and cash resource allocation.
Formal Sale Process and Takeover Code Compliance
The strategic review will be conducted in compliance with the Takeover Code’s formal sale process guidelines. Equipmake has appointed PwC as its Joint Financial Adviser to oversee the process. Interested parties looking to submit proposals will be required to enter into non-disclosure and standstill agreements with the company.
