Iress Ltd (ASX: IRE) shares are starting the week on a positive note.
At the time of writing, the ASX 200 tech stock is up 5% to $9.52.
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Why is this ASX 200 tech stock surging?
Investors have been bidding the financial technology company's shares higher today after it released some big news.
That news reveals that Iress has entered into a binding share sale and purchase agreement to divest its Superannuation business to global financial services provider Apex Group.
According to the release, the ASX 200 tech stock decided to divest the Superannuation business following a strategic review as part of the company's transformation program.
The review determined that while Iress sees opportunities within its Wealth business to continue delivering software to superannuation funds, it felt that it was not the natural owner of a regulated superannuation services provider.
The transaction is structured to release $40 million in cash consideration upon completion plus additional payments of up to $20 million over 12 months subject to agreed revenue milestones.
Completion is expected in the second quarter of 2025 and is subject to Foreign Investment Review Board approval, novation of a material customer contract, and customary warranties and indemnities.
Following completion of the divestment, Iress will continue to provide certain services for a period of up to 18 months to assist in the transition of the Superannuation business to Apex Group's ownership.
'Delighted with this outcome'
The ASX 200 tech stock's CEO, Marcus Price, was pleased with the deal. He said:
As part of our transformation, Iress has streamlined its operations to focus on our core strengths in software delivery and to exit businesses with a higher regulated service prole. Apex Group is recognised as a global leader in the provision of fund and asset servicing to regulated financial services businesses.
We are delighted with this outcome, which is a great result for all parties – clients, employees and shareholders – and will see the Superannuation business strengthened under new ownership. Importantly, Iress will continue to play an important role in the growth of the Superannuation industry through the provision of advice and education software to funds and their members.
Price revealed that the sale will allow the company to focus on its core operations. He adds:
Today's announcement enables Iress to double down on our core markets and customers in Wealth, Trading and Market Data; while continuing to improve our operational strength underpinned by a robust balance sheet and improved earnings profile.
