Molins selling tobacco machinery unit to Italian G.D

Global packaging solutions group Molins announced on Thursday that it had entered into a conditional agreement with G.D, a wholly owned subsidiary of Coesia, to sell its instrumentation and tobacco machinery division for a gross cash consideration of £30m, on a cash-free, debt-free basis.

The AIM-traded company said that, in line with its strategy, the net proceeds of the sale would primarily be used to invest in the group's packaging machinery activities to capitalise on the “attractive growth opportunities” in their end markets.

It said the sale provided the opportunity to accelerate the group's strategy to be a “global leader” of packaging solutions, and would provide the platform to invest in the group's existing Langen and Molins Technologies businesses and acquire complementary businesses.

The gross consideration for I&TM of £30m, with net cash proceeds after fees and taxation expected to be £27.3m, was said to be “similar” to the book value of the net assets, including goodwill, being sold.

Molins said it had also agreed to make a one-off contribution to the Molins UK Pension Fund of 10% of the net cash proceeds, and formalised an agreement with the fund's trustees following the completion of the valuation as at 30 June 2015.

It said £1.5m of the consideration would be retained within an escrow account for up to two years in accordance with warranties and indemnities given by Molins in the sale agreement.

The balance of net proceeds of £23.1m would be retained to execute the company’s growth strategy, strengthen the group's balance sheet and leave it in a cash-positive position.

As part of the transaction, the company also agreed to transfer the name 'Molins', and following completion, Molins would retain the right to use the name for a period of six months.

The first part of Molins' financial year resulted in order intake in all parts of Molins being at levels ahead of the same period last year, with trading also ahead, the board also reported on Thursday morning.

Completion of the transaction remained subject to conditions, including the approval of shareholders at a General Meeting to be held on 27 June.

“The sale will provide Molins with the platform to accelerate the execution of its strategy to invest in growth packaging machinery sectors,” said chief executive Tony Steels.

“Molins has a presence in large and attractive growth markets, an enviable portfolio of global multinational customers, an impressive range of innovative technologies and above all a very talented and engaged workforce.

“With the proceeds from the sale of I&TM, I am even more confident about the growth opportunities for the group.”