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.
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"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.
