Elektrobit Corporation (EB) said it sells its Automotive business to Continental AG for EUR 600 million and cancels the demerger process.
Article continues below
Share purchase agreement with Continental AG was signed on May 18, 2015 and the transaction is expected to close at the beginning of July, subject to the approval of EB's Extraordinary General Meeting, receipt of the required authority approvals and other customary closing conditions.
EB cancels the ongoing demerger process, and it will continue to carry on the Wireless business within existing Elektrobit Corporation. EB will change its name to Bittium Corporation, as the Elektrobit brand will be included as a part of the transaction. The company will continue to be listed on Nasdaq Helsinki with the new name.
EB plans to hold an EGM on or about June 11, 2015 to approve the transaction. Continental has acquired all the necessary corporate approvals for the consummation of the transaction.
The Board of Directors of EB has assessed the transaction, its relative merits, terms and conditions, as well as requested and received a fairness opinion (the "Fairness Opinion") from Pohjola Bank plc concerning the fairness of the transaction, from a financial point of view. Based on its evaluation the Board of Directors of EB has undertaken to unanimously and unconditionally recommend the approval of the transaction to the shareholders of EB.
Certain major shareholders of EB representing approximately 46 % of the shares and votes of the Company have undertaken to irrevocably and unconditionally vote in favor of the approval of the transaction at the EGM.
The purchase price is EUR 600 million. EB expects that the transaction has a non-recurring positive effect of approximately EUR 530 million on net profit and approximately EUR 575 million positive effect on net cash flow in the year 2015.
EB intends to repatriate the majority or all of the net proceeds from the transaction to shareholders after the closing of the transaction. The resolution on the repatriation of funds is subject to a separate resolution by a separate shareholders meeting planned to be convened after the closing of the transaction.
EB has received an advance ruling from the Finnish tax authority according to which the transaction is tax exempt. ■