Shares in motor finance specialist S & U (LON:SUS) revved higher after it announced the sale of its home credit business, Loansathome4u, for £82.5mln.
The cash sale, to Non-Standard Finance, will generate £80mln net of expenses, S & U said, while gross cash proceeds from the disposal equate to around 694p per S & U share.
S & U’s shares shot up 194p to 2,475p on the announcement, which held out the probability of a significant return of capital to shareholders once the dust had settled on the deal.
The home credit business has been overshadowed in recent years by the faster growing motor finance division, Advantage, and proceeds from the proposed disposal will allow S & U to pump £34mln into Advantage plus another £13mln into Advantage’s nascent vehicle lending product aimed at small to medium sized enterprises (SMEs), the lender said.
The proposed disposal requires the approval of shareholders, but the company said that shareholders controlling 51.94% of the voting rights have already given cast iron guarantees to vote in favour of the asset sale.
"The recent unsolicited approach from Non-Standard Finance plc for our home credit business led the board to reconsider the group's future strategy,” revealed Anthony Coombs, chairman of S & U.
"The board believes that there are significant benefits from the sale of Loansathome4u for realising fair value for our shareholders; but also significant opportunities to further accelerate the expansion of Advantage and develop its nascent small business vehicle lending products, as well as other higher growth areas of specialist finance,” Coombs added.