Sims shares lift after $385m sale of UK Metal to Unimetals
Make us a preferred source
Make us a preferred source on Google
The news: Metals recycling firm Sims surged on the ASX after agreeing to sell its UK Metal (UKM) business to Unimetals Group for £195 million ($385 million), following a strategic review announced last year.
The numbers: Sims shares were up 8.8% to $10.54 by 11:45am AEST, having shed more than 30% since the turn of the year.
In a late announcement on Monday, Sims said the value realised through the transaction represented a "significant premium" to the net carrying value of the asset, and comprised of 28 facilities, including three port facilities, and four shredders.
UKM sales volumes represented around 14% of the total Sims metal sales volumes in FY24. Moving forward, the company said its metal portfolio will include Australia and New Zealand metal, North America metal, and its 50% interest in the SA Recycling joint venture with Adams Steel.
Meanwhile, Sims also announced that it signed a letter of intent to sell its remaining interest in CLP Circular Services for around USD32 million ($50 million). The company said the two sales of UKM and Circular Services will generate after tax cash proceeds of around $435 million, which will be received in the first half of FY25.
The context: Sims said completion of the UKM deal, expected before the end of Q1 FY25, remains subject to customary completion conditions including obtaining regulatory approvals. Unimetals will assume responsibility for the employees currently working in the UKM business.
What they said: Sims CEO and managing director Stephen Mikkelsen said: "We conducted a comprehensive strategic review of UKM, evaluating all options, including a sale, forming a joint venture, or restructuring the business. The board concluded that a sale provided the optimal outcome for Sims and its shareholders".
"By focusing on high-potential markets such as the United States, Australia, and New Zealand, where our business position and demand for scrap are stronger, we can effectively leverage our strengths and drive sustainable growth," he said.
The source: ASX announcement
