Accident prone banknote printer De La Rue (DLAR) announces the sale of its international identity solutions business to HID Global for £42m pounds, giving the shares a boost, up 6p to 306p.

After issuing a profits warning on 30 May, the sale proceeds will be welcome funds to shore up the balance sheet as the company embarks on a £20m cost cutting plan to redress over-capacity in the banknote printing market.


Under the terms of the agreement, HID Global would acquire De La Rue's international identity solutions contracts, associated software, passport assembly facilities in Malta, and certain printing contracts of security documents such as visas and birth/death/marriage certificates.

The agreement includes De La Rue providing printing services to HID Global until March 2022, but the UK passport contract was excluded from the agreement.


The sale proceeds represent around 14% of the current market capitalisation and will reduce the recently reported net debt of £107.5m by 40%.

The company will use the proceeds to strengthen the balance sheet and to provide funds to invest in other areas that are of more strategic importance.

For example, the company sees identity-related security features and components as more accessible growth opportunities, with synergies that offer better returns on capital.

In a recent investor presentation the company showed that it was is seeing revenue growth rates of 38% in the security features business.


It looks like De La Rue has received an attractive price for the business, which has revenues of £37.8m and an operating profit of £2.3m, giving an exit multiple of 18.2 times.

To put that into perspective, the company recently reported adjusted operating profits of £60.1m for the year ended 31 March, implying a ratio of 5.1 times for De La Rue.

Mark Sutherland, exiting CEO commented ‘After assessing all options, we believe that exiting the end to end identity solutions market is the right one for the Group and will deliver the most value to shareholders. Focusing on the identity-related security features and components is in line with our strategy to transform De La Rue to an asset light and more technology-led businesses’.

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Issue Date: 12 Jun 2019