Sale of Invensys Rail to Siemens

Proposed disposal of Invensys’s Rail Division for £1,742 million, agreement with Trustee of Invensys’s UK Pension Scheme, proposed £625 million return of capital and strategy for the more focused continuing Group.

• Invensys agrees to dispose of Invensys Rail to Siemens for £1,742 million
• Agreements with Trustee of Invensys’s UK Pension Scheme to provide the Company with a long term pension solution and increased financial flexibility:
o Up-front payment of £400 million, and
o Payment of £225 million to a trust
• Proposed return of cash to Shareholders of £625 million (approximately 76 pence per share)
• Creates a more focused industrial software, systems and control equipment business with significant exposure to higher margin and higher growth markets, and funds to invest in them
• Significant run-rate cost savings of £25 million per annum by the end of FY2014 based on a simplified organisational structure
• Completion expected in second quarter of calendar 2013 conditional on Invensys shareholder approval, UK Pensions Regulator approval, certain anti-trust consents and lending bank approval.

In view of its size, the proposed disposal constitutes a Class 1 transaction for the purposes of the Financial Services Authority’s Listing Rules and therefore requires the approval of Invensys shareholders in order for it to be implemented. A circular containing further details of the proposed disposal and containing the notice convening the General Meeting will be sent to Invensys’s Shareholders as soon as practicable.

Wayne Edmunds, Chief Executive of Invensys, commented:
“Following a strategic review which highlighted the likely consolidation in the global rail signalling market and the limited scope to increase the size of the Invensys Rail business, we have decided to refocus the Group around our industrial software, systems and control equipment business and, accordingly, to dispose of Invensys Rail.
“Invensys Rail has made significant strategic progress over the last five years and this is reflected in the disposal price of £1.7 billion, which we believe delivers attractive value for our Shareholders and also reflects Siemens’s ability to maximise the division’s potential.
“As well as providing Shareholders with an immediate cash return, this transaction enables the Group to create a long term pension solution and therefore increased financial flexibility going forward. The agreements we have reached with the Trustee of the Invensys UK Pension Scheme for the £400 million contribution and the £225 million Reservoir Trust will result in the cessation of the current deficit reduction payments of £40-47 million per annum and we anticipate that no further contributions will be payable into the Scheme.
“This transaction creates a more focused industrial software, systems and control equipment Group with a significant exposure to higher growth and higher margin segments and the resources to invest in them. It also allows us to make substantial cost savings through a simplified organisational structure.”

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