Crane Group Limited today announced the sale of its aluminium business, comprising Crane Aluminium Extrusions, Crane Aluminium Systems and Smart Aluminium to Capral Aluminium Limited for $124 million.
The sale price represents a multiple of 9 times 2005 earnings before interest, tax and goodwill amortisation (EBITA). The transaction will generate a profit on sale for Crane of approximately $32 million after allowing for restructuring charges relating to the planned reduction of overhead costs following the sale of the aluminium business and tax.
The sale of this business is a significant development for Crane in the implementation of its strategic plans. The sale further reduces the group’s exposure to metal manufacturing, with Crane’s Metals division moving from five manufacturing facilities 12 months ago to one facility post completion of this transaction and the closure of Conex, which was announced last month.
The sale is expected to be completed by 31 October 2005 subject to various conditions. All Crane employees currently employed within the aluminium businesses will be offered employment with Capral. Both Crane and Capral will work with customers of the business prior to completion to ensure a smooth transition of service.
Proceeds from the sale will be used to pay down a substantial proportion of the group’s debt. Excluding the profit on sale of $32 million and taking into account the expected debt reduction and restructuring, the disposal of Crane’s aluminium business is expected to result in a reduction of $3.7 million in forecast operating net profit after tax for the year to 30 June 2006. However, with significantly reduced debt and a strong balance sheet, Crane will be positioned well to pursue growth opportunities in Tradelink, Iplex and Crane Distribution New Zealand to enhance future shareholder returns.