SINGAPORE (May 20): Nera Telecommunications is planning to sell its payment solutions business to Ingenico Group S.A. for $88 million.
Ingenico is a global leader in seamless payment, providing smart, trusted and secure solutions to empower commerce across in-store, online and mobile channels.
Nera has entered into a conditional share sale agreement with Ingenico which will result in the sale of the company’s entire payment solutions business across Singapore, Malaysia, Thailand, the Philippines, Indonesia and Vietnam.
Nera expects to record a disposal gain of $71.5 million.
It intends to return a significant portion of the net proceeds from the sale to its shareholders.
Samuel Ang, President & CEO of Nera, says, “The offer by Ingenico represents an attractive opportunity for us to unlock shareholder value and sharpen our focus on our core network solutions business, in line with our strategic objective of streamlining our business activities. We are proud of our payment solutions team for building a high quality regional business, and are confident that Ingenico Group has the capability to take our team to the next level under their global umbrella.”
Based on Nera’s FY2015 financials, its payment solutions business accounted for 26% of the company’s total revenue of $181.5 million and 21% of its total earnings of $13.4 million.
Ingenico’s offer of $88 million represents 35% of Nera’s market capitalisation of $251.5 million as at close of trading on Thursday.
The proposed transaction is subject to approval by Nera shareholders.
Asia Systems, controlled by private equity firm Northstar Group, which owns 53.38% of Nera Tel, has taken an irrevocable undertaking to vote in favour of the proposed transaction.
CIMB analyst William Tng in a Wednesday report highlighted Nera as one of a handful of small caps stocks as an investing idea. Tng forecast a special dividend following a successful sale is not unexpected, given that the major shareholder of Nera is a private equity fund. “This could also mean that Nera will once again be a network and telco solutions specialist with a business that is less capital intensive. Hence, a return to its high dividend payout ratio is a very likely outcome,” says Tng.
Nera shares closed at 69.5 cents on Thursday.