SMART Global Holdings, Inc SGH unit SMART Modular Technologies (LX) has agreed to sell an 81% interest in SMART Brazil to Lexar Europe B.V. for approximately $166 million in cash.
Lexar Europe is an affiliate of Shenzhen Longsys Electronics Co., Ltd. The purchase price values 100% of SMART Brazil at an initial enterprise value of $205 million.
SMART Brazil assembles and tests modules for electronics manufacturers that sell devices to Brazilian consumers.
In addition to the upfront and deferred cash payments, SGH will retain a 19% interest in SMART Brazil.
"The majority divestiture of our standards-based, commodity module business in Brazil will enable SGH to focus on our strategy of delivering high-performance, high-availability solutions to our enterprise customers," said Mark Adams, chief executive officer of SGH.
SGH will receive an upfront cash purchase price of $137.7 million at closing. Eighteen months following the closing SGH will receive a deferred cash payment of $28.35 million.
The deal will strengthen the company's financial position, enabling it to increase strategic investments into domestic research and development and U.S.-based production of advanced technologies.
The company expects this transaction to be accretive to its non-GAAP gross margins immediately post-closing, and sales for SMART Brazil were approximately $114 million for the first half of SGH's fiscal 2023.
The transaction is expected to close by the end of calendar year 2023.
Price Action: SGH shares are trading higher by 3.41% to $24.55 in the premarket session on the last check Tuesday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
