Sandvik signed a deal with the US-based private equity company CoBe Capital to sell its Mining Systems operations that was reported in the Sandvik income statement as discontinued operations.
Mining Systems is a supplier of design and engineering of material handling systems for the mining industry.
The high-technology engineering company will maintain ownership of on-going projects which are close to finalisation.
The closing of the transaction is expected during the fourth quarter of 2016, subject to the satisfaction of certain conditions precedent.
[quote]The parties have agreed not to disclose the purchase price.
The transaction entails a capital loss of -800 million SEK, impacting the result of the company’s discontinued operations for the third quarter of 2016.
The capital loss includes a negative cash flow impact of -600 million SEK, primarily in conjunction with the closing of the deal.
In 2015 the Mining Systems operations, with 1 100 employees had annual sales of 5 billion SEK representing 6% of Sandvik Group revenues and an operating loss was reported at a low single digit margin level.
Björn Rosengren, President and CEO of Sandvik says that divesting the Mining Systems is an important step in consolidating the company to its core operations, which for Sandvik Mining and Rock Technology is high technology mining equipment and aftermarket offerings.
The intention to divest Mining Systems was first communicated through a press release 1 October 2015.