Invensys disposes of paper business

Invensys took another step in its restructuring programme last week with the £491m sale of its paper technology unit to venture capital outfit Apax Partners. Invensys said it would reinvest about £11m of the total in the form of a 10% stake in the paper technology business. It would also scoop £424m in cash and […]

Invensys took another step in its restructuring programme last week with the £491m sale of its paper technology unit to venture capital outfit Apax Partners.

Invensys said it would reinvest about £11m of the total in the form of a 10% stake in the paper technology business. It would also scoop £424m in cash and a further £67m by way of a loan note.

The price fetched for the US subsidiary represents a multiple of seven times pre-exceptional profits. Chief executive Allen Yurko pronounced himself pleased with the transaction, which marks part of the Invensys strategy of focusing on automation and controls.

Analysts were lukewarm about the price achieved, but conceded that the company’s overall restructuring programme is still on course.

William Mackie of Credit Lyonnais said: `It’s not a wonderful price, but they are well on track for £1.8bn of targeted proceeds and are reinvesting in supplies and controls in which they are a world leader.

`They’ve got a good story to tell and there is going to be plenty of room for upgrades in earnings,’ he added.

Apax, which formed a £1.3bn fund to invest in Europe earlier this year, was believed to have offered almost £600m for the business initially, but scaled back its offer after conducting due diligence.