MELKSHAM, England—Avon Rubber P.L.C. is selling its Milkrite InterPuls business to DeLaval Holding B.V. for $226 million on a cash and debt-free basis. The move allows Avon to focus solely on its growing defense products business.
Subject to closing conditions and regulatory approvals, the deal is expected to be completed in the first quarter of the firm's 2021 financial year (ending Sept. 30), Avon Rubber said in a news release.
The business, which supplies "milking point solutions" to dairy farmers worldwide, has been growing and profitable over many years, according to Avon Rubber.
For the fiscal year ended Sept. 30, 2019, Milkrite InterPuls generated sales of $57.6 million, adjusted EBITDA of $11.85 million and statutory operating profit of $4.29 million.
The business is led by Managing Director Craig Sage and Finance Director Andrew Porter, who are to transfer to DeLaval, along with all of the other employees.
The Milkrite InterPuls unit has been an important part of the group for many years, according to Avon Rubber CEO Paul McDonald. "However, having achieved our valuation expectations, the board believes the time is right to allow this business to grow and flourish under new ownership," McDonald said.
With around 4,500 employees and part of Tetra Laval Group, Stockholm-based DeLaval is a worldwide supplier of milking equipment.
In a statement, Joakim Rosengren, DeLaval president and CEO, described Milkrite InterPuls as "a very successful company with a strong brand and trademark portfolio acknowledged by dairy farmers across the world."
The acquired business, Rosengren said, will operate as a stand-alone company within the DeLaval organization.
After the sale, the English group will be solely focused on its Avon Protection business, a global supplier of respiratory and ballistic protection in military and first responder markets.
According to McDonald, proceeds from the sale of the Milkrite InterPuls business will "provide further funding capacity, enabling us to take advantage of acquisition opportunities ... and enhance our capabilities within our target markets."
After tax and transaction costs, the rubber-based products supplier expects to receive net proceeds before customary adjustments of around $181 million.
Under an agreement with trustees of its U.K. pension plan, Avon Rubber said it will make a one-time contribution of $22.6 million to strengthen the plan's funding after sale completion.