TT Electronics offloads division to AVX

TT Electronics hived off its Transportation Sensing and Control arm in order to pay down debt and fund future growth and acquisitions.

The Woking, England based company who are a global manufacturer of electronic components and a provider of manufacturing services for the transportation, industrial, aerospace, defence and medial markets, sold the division for £118.8m on a cash-free, debt-free basis to AVX Corporation subsidiary, AVX Ltd.

That price-tag was equal to 11.1 times' the unit's fiscal year 2016 underlying earnings before interest and taxes.

By virtue of the sale the company will be in "an improved geographic and market balance" and that the "much stronger" position afforded to them will allow for focus on its "strategy of investing in structural growth markets" now that they are in a "significantly enhanced financial capacity", the company said in a statement.

Last year, the TS&C division generated revenues of £237.4m, just less than twice the sale amount.

Besides its site in the UK it also has operations in Austria, China, Germany, India, Mexico, Romania, South Korea and the US, employing about 1,700 people across the nine locations.

The cash generated from the deal, that is still subject to anti-trust clearance and TT Electronics shareholders will be used to pay down the company's existing net debt and as per the announcement, "fund further investment to accelerate growth through capital investments and acquisitions."

Richard Tyson, CEO of TT Electronics commented that the sale was, "an important step for TT."

Noting that, having returned the division to "growth and profitability faster than expected,” that it was now “better positioned to achieve its full potential under the ownership of AVX."

As of 1157 BST shares in TT Electronics were 10.87% higher at 204.0p.