CPP Group offloads German card protection business
Financial and insurance services company CPP Group has sold CPP Germany, its German card protection legacy business, to banking, retail and leisure value-adding specialist Mehrwerk, it announced on Tuesday.
The AIM-traded firm said total consideration was agreed at £2.3m, which, after adjustment for working capital, would result in the group receiving cash proceeds of around £2.2m before transaction costs.
It said the disposal was in line with its commitment to maximise value from its assets, and focusing on the areas of the business that had the strongest prospects for delivering sustainable and profitable medium to long-term growth.
In line with its capital allocation priorities, CPP Group said the proceeds would be used to strengthen its working capital base, provide additional financial flexibility to deliver its growth strategy, and enhance returns for shareholders.
CPP said it would retain a presence in the German market, managed through its UK operation, including the potential for further distribution arrangements via Mehrwerk.
“CPP Germany is a non-core book of card protection business that was placed in runoff, which included closure of the company's operation in Hamburg, following a strategic decision to restructure the group's EU markets in 2018,” the company’s board said in its statement.
The business accounted for £1.1m of the £8.1m contribution to group EBITDA from its ongoing operations in 2020.
As a result of the disposal, revenue and profit contribution from that operating segment would be reduced in the future, and as at the date of the sale, the unaudited net liabilities being disposed of totalled about £0.8m.
“The sale and purchase agreement contains warranties and indemnities by the group usual for a transaction of this nature and an agreement that the group will refrain from any activity in the card protection market that places it in competition with Mehrwerk in Germany and Austria for a period of two years,” the board added.
“The group has granted Mehrwerk a five-year licence to use the CPP name for marketing and the provision of CPP Germany's existing services.”
At 1454 BST, shares in CPP Group were down 1.56% at 519.25p.