A strategic review at the struggling security printing PLC earlier this year resulted in potential interest for both of its divisions, although Authentication was viewed as the more immediately saleable asset.
Today (15 October), De La Rue announced it had reached an agreement with acquisitive $1.4bn (£1.07bn) turnover group Crane NXT.
The Authentication business had sales of just under £103m in the year to 30 March and employs around 450 staff.
The division made an adjusted operating profit of £14.6m and had gross assets of £83.3m.
Crane NXT said the buy would strengthen its position in the $3bn global authentication technologies market, and had commercial and operational synergies with its existing businesses.
It expects to achieve double-digit returns on invested capital by year five.
Earlier this year Crane NXT acquired the OpSec authentication and brand security business in a $270m cash deal.
De La Rue said the £300m would allow the PLC to repay its existing £235m revolving credit facility in full and reduce leverage to “a net cash position”.
De La Rue has an obligation to repay the facility on or before 1 July 2025 – and had previously flagged that it had insufficient liquidity to repay it if it was unable to successfully conclude a sale.
De La Rue will also pay £30m into its legacy pension scheme, plus an additional £12.5m in deficit repair contributions over the period to April 2027.
In agreement with the pension trustee De La Rue has deferred its deficit repair contributions since April 2023 because of the group’s financial issues.
The pension scheme had a £78m deficit at September 2023.
The sale of Authentication to Crane NXT is subject to a number of conditions including the successful separation of the business and the physical separation of De La Rue’s Malta factory so that Authentication and Currency can operate independently from the site.
18 months ago, DLAR was 3 months from administration. Had we not changed the Chairman, shareholders would have received zero. £300m was our TP for Authentication. We retain our 150p TP, as a bidder for Currency or the whole (ex Auth), appears inevitable.https://t.co/rzSYni89Jo
— Richard Bernstein (@CrystalAmberRB1) October 15, 2024
De La Rue’s share price jumped by 22.08p on the news, to 116p, and had settled at 106p – up 12.66% – at the time of writing (52-week high: 119.90p, low: 56.40p).
De La Rue chairman Clive Whiley said the sale was “a substantial step forward” in realising the underlying value of the business for stakeholders.
He commented: “We are delighted to reach agreement with a company with the stature of Crane NXT, with its complementary strengths and are confident that the Authentication division will continue to build on its considerable successes over the past few years.”
He said the deal would provide “a springboard to unlock further intrinsic value as we move to find a long-term funding solution for the group's legacy defined benefit pension scheme. In addition, we will be able to focus fully on building and growing our world-leading Currency business”.
Following completion of the transaction, De La Rue will comprise of its profitable, market-leading £207m turnover Currency division, and with net cash on its balance sheet.
Posting on X, activist investor Richard Bernstein of Crystal Amber Fund, De La Rue’s biggest shareholder with a 16.48% stake, said he believed a further bid for the Currency wing now appeared inevitable.
Crane NXT was formed last year when Crane Holdings Company separated into two: Crane NXT and Crane Company.
Crane NXT has a market capitalisation of $3.14bn.
Luxe paper stationery specialist Crane Stationery is a separate business that was sold by Crane Holdings Company in 2015 and is now owned by WP Strategic Holdings.
