Singapore Technologies Engineering plans to sell its US-based construction equipment unit LeeBoy for US$290 million.
The net proceeds of some US$246 million will be used to pay down debt, saving interest costs of some US$9 million a year.
The buyer is French company Fayat Group, which is paying an enterprise value of 9.3x LeeBoy’s earnings before interest, tax, depreciation and amortisation.
According to ST Engineering, the sale is part of its ongoing portfolio rationalisation effort.
Among others, LeeBoy builds asphalt laying equipment, a sub-segment under its defence and public security segment.
ST Engineering is enjoying a run this year because of stronger demand for other defence and public security offerings such as ammunition and other military hardware.
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"As its business environment evolves, the company continually evaluates how each of its businesses aligns with its growth objective and core capabilities.
"This approach ensures that capital and resources are efficiently allocated to drive sustainable growth and deliver enhanced value to its stakeholders.
ST Engineering shares closed at $7.83 on June 24, down 1.14%.
