XMH Holdings is selling 14.8% in a fully-held unit to Mitsubishi Heavy Industries Energy System Asia for $12.3 million, and will be booking a gain if $10 million from this deal.
According to XMH on Sept 15, after selling this stake in Mech-Power Generator, the latter will remain as a subsidiary, which is in the business of assembly and sale of generators and related accessories.
The buyer, an indirect subsidiary of Japan's Mitsubishi Heavy Industries, is an existing supplier of generators and marine engines to XMH in the Asia Pacific region.
"The proposed disposal presents a strategic opportunity to establish and foster closer collaboration between Mech-Power and MHIESA and to enhance strategic partnerships and operational synergies between them," says XMH.
Following the deal, Mech-Power will work closely with MHIESA on production capabilities and capacity.
This deal will enable Mech-Power to leverage MHIESA's established business network, thereby expanding its market reach beyond its current customer base.
"This expansion is expected to generate additional revenue streams and in turn improve shareholder value and returns," the company says.
The sale is also a "good opportunity" for XMH to realise an appreciation in value over its investment in Mech-Power, and channel proceeds to improve its working capital and explore new opportunities for investments.
XMH Holdings shares closed at $1.65 on Sept 15, up 0.61% for the day and up 132.39% year to date. This gives the company a market value of nearly $190 million and a historical PE of 7.08x.
