Integrated Micro-Electronics (IMI), the manufacturing arm of the Ayala Group, has sold its 80 percent stake in STI Enterprises Limited for GBP 6 million or about P425 million.
In a disclosure to the Philippine Stock Exchange, the IMI said it has sold its stake in STI together with the minority shareholders owning the remaining 20 percent in the company.
STI is a private limited company based in the United Kingdom which provided electronics design and manufacturing solutions in both printed circuit board assembly and full box-build manufacturing for high-reliability industries.
The company currently has two factories in the United Kingdom in Hook and Poynton as well as one in Cebu, Philippines and operates a design center in London. IMI acquired its 80 percent stake in STI in 2017.
STI was sold to Rcapital, a private investment firm based in London with a portfolio of UK-based companies including precision engineering solution providers in the aerospace and defense sectors.
Closing of the deal will take place after satisfaction of the condition precedent. The parties have agreed on an enterprise valuation of GBP 7.5 million.
“Various geopolitical issues including Brexit, COVID-19 and supply chain issues have delayed STI's ability to achieve the targets we set during its acquisition in 2017,” said IMI.
It added that, “Realizing these targets will require more time, additional funding, and resources that an alternative partner may be able to better provide.”
The firm said this divestment initiative is in line with IMI's ongoing strategy to sharpen its portfolio, focusing on its growth and profitability within its priority markets of mobility, connectivity, and smart energy.
The rationalization of IMI's operations will allow for tighter management focus and capital allocation as the company navigates today's challenging macroeconomic and geopolitical environment.
“The preliminary indicative price discussions show a one-time loss of approximately $84 million, including the impairment of goodwill amounting to $55 million, and a 22 percent reduction in IMI's equity.
Net debt to equity ratio will increase from 0.6 to 0.7, still well within the company's target range.