Monday 7th May 2018
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Tru-Test Corp plans to shed the bulk of its businesses, signing a conditional deal to sell its retail solutions and milk meter divisions, amounting to 85 percent of group revenue, to Switzerland-based Datamars.
The transaction is subject to shareholder agreement at a special meeting planned for June, and Overseas Investment Office approval, something Datamars has already achieved with its recent acquisition of Simcro Holdings. The deal was done in the first eight months of new chief executive Simon Mander's tenure, who was tasked with getting the agritech firm into shape.
No price was disclosed and if it goes ahead, Tru-Test's dairy division will operate as a standalone business, having bounced back from the 2016 downturn. The acquisition includes the Tru-Test brand.
"For some years many shareholders, large and small, have pressed the directors for initiatives that would create more liquidity for their shares and an opportunity to realise value," chair John Loughlin said in a statement. "Against this background, they should find this development very satisfying."
In a separate statement, Datamars said the acquisition will wrap animal management products and services with independent animal data, which chief executive Klaus Ackerstaff described as providing "seamless integration of data in day-to-day operations at the farm level".
Tru-Test's Loughlin said that integration will create an enhanced business model for managing animal performance and that both companies will benefit from the deal.
"Key operations in primary and growth markets will be significantly increased and total business revenue will significantly increase for the combined group," he said.
Tru-Test reported a loss of $3.5 million in the year ended March 31, 2017, narrowing from a year-earlier loss of $14.3 million when it wrote down the value of Dairy Technology Service. Sales shrank 11 percent to $125.6 million, while earnings before interest, tax, depreciation and amortisation more than halved to $5.8 million.
Simcro reported a loss of $263,000 in calendar 2016 on revenue of $46.3 million. Gross profit was $19.6 million that year.
The transaction is expected to settle in August or September.
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