Downer EDI Limited (ASX: DOW) has agreed to sell most of its laundries business for $155 million.
What’s Downer? It says that it’s a leading provider of integrated services in Australia and New Zealand. It designs, builds and sustains assets, infrastructure and facilities.
What was announced?
Downer has agreed to sell 70% of its laundries business to a subsidiary of Australian private equity business Adamantem Capital for $155 million on a cash and debt free basis.
After this transaction is completed, Downer will cease to consolidate the laundries business in its accounts. Instead, it will recognise the residual 30% ownership as an equity accounted investment.
Downer CEO Grant Fenn said: “The sale of 70% of Laundries achieves the objective of removing one of the most capital-intensive businesses from the Downer balance sheet. Laundries continues to perform well as it recovers from the COVID-19 lockdowns in New Zealand and Victoria and by retaining a 30% interest we will participate in this ongoing recovery.”
Summary thoughts
This seems like a solid sale price for Downer and it can put that money to work in other parts of the business which have more growth potential.
I like an industrial business with growth potential, but I don’t know how much growth there is in the industry. I like the theme of cash payments going digital, which is one of the main reasons why I like Pushpay Holdings Ltd (ASX: PPH) so much – it seems like a very scalable business.
