Telit Communications to sell automotive division for $105m

Telit Communications on Friday agreed to sell its automotive division to China's TUS International for $105m cash in order to reduce debt and focus on developments in the Internet of Things.

The AIM-traded company said it had been considering the division’s sale, which could rise to $125m and is expected to be completed before the end of the year, as it is a product line that may not fit Telit’s long-term strategy.

The division won a number of design contracts in 2017, generating revenues of approximately $63.2m according to unaudited results, but the sale will allow Telit to refocus on industrial IoT capabilities and the reduction of its debt.

At 30 June, the company had a net debt position of $25m.

TUS, part owned by Tsinghua University's investment arm, is a provider of camera-based advanced driver-assistance system solutions and is one of 12 founding members of the National Intelligent and Connected Vehicle Innovation Center of China.

Yosi Fait, chief executive at Telit, said: "This transaction will significantly reduce our debt and provide us with the financial flexibility to focus our resources and accelerate the integration of our hardware and IoT services product lines in order to strengthen our leading position in the end-to-end IoT solutions space."

As of 0806 BST, Telit Communications’ shares were up 0.49% at 165.20p.