The Altium Limited (ASX: ALU) share price will be on watch today. This comes after the company announced it will divest it non-core TASKING business to shift its full support behind Altium 365.
Last Friday, the Altium share price finished the week at $36.16. It will be interesting to see which way its shares will move today.
Sale of business
According to the release, Altium advised that it has entered a definitive agreement to sell off its TASKING business to FSN Capital.
Established in 1999, FSN Capital is a private equity firm that manages 2.125 billion euros in the northern European region. The company focuses on software and technology investments.
The sale of the assets is for an agreed value of US$110 million, in which US$100 million will be first settled in cash up front. The remaining US$10 million will be received by Altium upon FSN Capital achieving revenue targets for TASKING in FY21.
The deal is expected to be finalised in the first quarter of the 2021 calendar year, subject to standard conditions and regulatory approval.
Transaction impact
Altium noted that the proceeds received will have a one-time positive impact on its earnings per share (EPS) for FY21. The first-half of the fiscal year will include the TASKING business, however the second half will be without.
Looking at the bigger picture, Altium reaffirmed its full-year guidance with its first-half performance on track, although the company said that its traditional 45/55 revenue split for the current financial year will be distorted. This is due to the combined effect of COVID-19 and the divestment of its TASKING business.
The full impact of the sale and its ongoing operations will be released in Altium's half-year results on 15 February 2021.
What did management say?
Altium chair Mr Sam Weiss commented on the company's decision to offload its TASKING business:
We are generating real momentum with Altium 365, the world's first cloud platform for PCB design and realization, and we believe that Altium 365 is critical to enhance long term shareholder value.
The divestment of TASKING enables us to singularly focus on our transformative vision and to fast track the building and acquisition of complementary assets
Altium CEO Mr Aram Mirkazemi added:
The strategic divestment of TASKING combined with our recent organizational changes and hard pivot to the cloud marks an inflection point for Altium in its pursuit of industry transformation. While TASKING is a great business, it does not play a central role in our design to realization strategy for the electronics industry, which is being delivered through our new cloud platform Altium 365. The divestment of TASKING will free up organizational capacity and allow Altium leadership to focus on our main game, which is to expand Altium 365 and accelerate its adoption.
About the Altium share price
The Altium share price reached an all-time high of $42.76 before COVID-19 hit the global economy in February. In the month following, its shares fell to a 52-week low of $23.11, and then rose steadily back up to the $35 range.
Over the past 7 months, the Altium share price has not moved much, only increasing 7%. In comparison, the S&P/ASX 200 Index (ASX: XJO) has gained 24% over the same period.
