Telit Communications Plc (LON:TCM) shares rose on Friday as the Internet of Things (IoT) enabler revealed it has agreed to sell its automotive division to TUS International for US$105mln in cash.
Telit, which has a market capitalisation of around £215mln, said the selling price is subject to adjustments on completion and an overall cap of US$125mln.
The transaction is expected to complete by the end of 2018, subject to conditions being satisfied.
READ: Telit confirms “numerous parties” interested in snapping up its automotive division
The sale of the division will enable Telit to focus on its industrial IoT capabilities and will provide additional resources to invest in its end-to-end IoT solutions capabilities. In the short-term, the cash will be used to reduce the group’s debt, which at the end of June stood at US$25mln.
TUS is a leading provider of camera-based advanced driver-assistance system solutions and is one of the 12 founding members of the National Intelligent and Connected Vehicle Innovation Center of China.
"This transaction will significantly reduce our debt and provide us with the financial flexibility to focus our resources and accelerate the integration of our hardware and IoT services product lines in order to strengthen our leading position in the end-to-end IoT solutions space,” said Yosi Fait, the chief executive officer of Telit.
In late morning trading, Telit shares were 1.8% higher at 168.1p.
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