Integrated Micro-Electronics said Friday it is selling its 80 percent stake in STI Enterprises Ltd., a specialist contract electronics manufacturer, at a loss as part of a broader strategy to focus on profitable operations.
IMI, the electronics manufacturing unit of the Ayala Group, and minority shareholders that hold the remaining 20 percent of STI, agreed to sell their combined stake to Rcapital, a private investment firm based in London with a portfolio that include precision engineering solutions in the aerospace and defense sector—a specialization of STI, at an enterprise valuation of GBP7.5 million, equivalent to around USD9.5 million.
Based on the preliminary indicative price discussions, IMI said it is likely to book a one-time loss of approximately USD84 million, including the impairment of goodwill amounting to USD55 million. The company said the current valuation will also mean 22 percent reduction in IMI’s equity while net debt to equity ratio will increase from 0.6 to 0.7, still within the company’s target range.
IMI said various geopolitical issues including Brexit, COVID-19 and supply chain issues have delayed STI’s ability to achieve the targets we set during its acquisition in 2017. In order to realize those targets, the company, will require more time, additional funding, and resources that an alternative partner may be able to better provide.
“This divestment initiative is in line with IMI’s ongoing strategy to sharpen its portfolio, focusing on its growth and profitability within its priority markets of mobility, connectivity, and smart energy,” the company said.
IMI said the rationalization of operations will allow for tighter management focus and capital allocation as the company navigates today’s challenging macroeconomic and geopolitical environment.
IMI’s core wholly-owned subsidiaries have been profitable since 2021 and reported 11.5 million USD in net income for 2022 and 2.6 million USD in the first quarter of 2023.
