The Cimic Group Ltd (ASX: CIM) share price climbed slightly higher this morning, before dipping to its current price of $24.55 per share.
The share price movement comes on the back of a pre-market announcement from the Aussie building and construction group regarding a major sale.
Why is the Cimic share price on the move today?
This morning, Cimic announced it has completed the sale of 50% of its subsidiary, Thiess. Thiess is the world’s largest mining services provider and was previously wholly owned by Cimic.
The price received for the 50% stake implies an enterprise value of $4.3 billion. For its stake, Cimic is set to receive $2.2 billion in cash from the completed transaction.
The Cimic share price is on the move in early trade following the news but remains down more than 23% for the year.
Cimic executive chair and CEO Juan Santamaria said the sale enables Cimic to “capitalise on the sector outlook and Thiess’ strong performance”.
The proceeds will be used to strengthen Cimic’s balance sheet by reducing debt and providing additional capital for organic growth.
Mr Santamaria said the retention of a 50% stake reflects the “ongoing strategic importance of Thiess” to Cimic’s business.
How has the Cimic share price performed this year?
Shares in the diversified construction group have been volatile in 2020 as the coronavirus pandemic has crimped growth.
The Cimic share price slumped to a 52-week low of $11.87 in the March bear market as investors were spooked by border closures and tightening restrictions.
Despite the lacklustre market reaction, today’s sale news is the latest move in a strong couple of months to close out the year. Shares in the Aussie company have jumped more than 30% since the end of September as the S&P/ASX 200 Index (ASX: XJO) has had one of its best quarters on record.
Cimic currently has a market capitalisation of $7.66 billion with a 6.3% dividend yield.