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TXT has agreed to sell its retail business for €85m in cash to Aptos, a North American retail software company. The deal should close by the end of October. Management expects to pay an extraordinary dividend in H118; we would expect a proportion of the proceeds to be retained to support the growth of TXT Next and the newly created TXT Sense business.
TXT e-solutions |
Sale of TXT Retail for €85m |
Disposal |
Software & Comp services |
24 July 2017 |
Share price performance
Business description
Analysts
TXT e-solutions is a research client of Edison Investment Research Limited |
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TXT has agreed to sell its retail business for €85m in cash to Aptos, a North American retail software company. The deal should close by the end of October. Management expects to pay an extraordinary dividend in H118; we would expect a proportion of the proceeds to be retained to support the growth of TXT Next and the newly created TXT Sense business.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/15 |
61.5 |
5.7 |
0.40 |
0.25 |
28.8 |
2.2 |
12/16 |
69.2 |
8.1 |
0.55 |
0.30 |
21.3 |
2.6 |
12/17e |
75.2 |
8.0 |
0.53 |
0.32 |
21.8 |
2.8 |
12/18e |
78.5 |
8.8 |
0.59 |
0.33 |
19.7 |
2.8 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments
TXT has agreed to sell its TXT Retail division to North American software company, Aptos, for cash of €85m (subject to working capital adjustments). The deal is expected to complete by the end of October. It does not need shareholder approval, but must meet various regulatory requirements including anti-trust approval in Germany and Austria as well as trade union consultation procedures.
Aptos (formerly known as Epicor Retail) supplies customer engagement, inventory management and analytics software, mainly in North America and the UK with a growing business in South America. Its technology and geographical coverage are complementary to TXT Retail’s business. There is no earn-out factored into the deal; TXT will have the option to participate in any future Aptos IPO up to a stake of 10% at the IPO price. In FY16, TXT Retail generated revenues of €36.1m, EBITDA of €4.5m and net income of €3m (c 52% of group results for each metric). The deal values TXT Retail at price multiples of 2.4x FY16 revenues, 19x EBITDA and 28x earnings. We leave our estimates unchanged pending H117 results on 3 August.
The company will propose an extraordinary dividend for approval at the shareholders’ meeting in March 2018. With the focus now on growing the TXT Next business, particularly in the aerospace and transport markets, we would expect a portion of the proceeds to be retained for future M&A within the remaining business.
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Disclaimer
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Disclaimer
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Leigh Creek Energy’s pre-commercial demonstration (PCD) continues to show progress, with funding now in place from China New Energy (CNE) and major construction contracts awarded and fabrication underway. The third and final tranche of funding of A$12.5m is due to settle after a shareholder vote later this quarter while regulatory approvals remain on the critical path in order for LCK to meet a late 2017 first gas target. Our RENAV remains at $0.26/share post equity dilution. We continue to risk our valuation with a subjective 20% chance of commercial success – we expect to revise this risking on completion of the demonstration project.