Morgan Advanced Materials plc (MGAM.L), a UK-based manufacturing firm, on Friday announced that it has agreed to sell its molten metal systems business unit to Vesuvius plc (VSVS.L, CKSNY) for 75.8 million pounds, in shares and cash.
The transaction is expected to be completed by early October.
The sale includes the firm's 75% shareholding in Morganite Crucible (India) Ltd. or MCIL, which will be bought by Vesuvius' Indian unit Foseco India Ltd.
The consideration includes the issuance of new Foseco India shares to Morgan, along with a cash acquisition of the remainder of the MMS business by Vesuvius.
Under the deal terms, Morgan will receive 1.2 million shares in Foseco India, which represents 15% C-type shareholding valued at approximately 55.8 million pounds. In addition, the company will receive 20 million pounds in cash as gross consideration.
For Morgan, the disposal of MMS is in line with its strategy to accelerate its organic growth and generate higher returns by focusing on specific faster growing markets.
The sale is expected to improve the financial position, investment for growth, along with enhanced shareholder returns in line with the firm's capital allocation priorities.
The transaction is conditional on the approval of the Indian Transaction by Foseco India shareholders. Vesuvius, which holds 75.0% of FIL shares, has undertaken to Morgan to vote in favour of the Indian transaction.
On the LSE, Morgan shares were trading 4.11% higher at 215.50 pounds, and Vesuvius shares were trading 1.70% higher at 368.36 pounds.
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