Keppel T&T to divest entire stake in Keppel Logistics for $80 million

SINGAPORE (THE BUSINESS TIMES) - Keppel Telecommunications and Transportation (Keppel T&T) will sell its entire stake in Keppel Logistics to Geodis International SAS for some $80 million, Keppel Corp announced on Thursday (March 31).

The proposed divestment is in line with the Keppel group's 2030 plans to simplify and focus its business, and is expected to take place in the second quarter of this year, the company said in a bourse filing.

Following the completion of the sale - which, it noted, is still conditional upon the receipt of approval from the regulatory authorities, among other things - Keppel Logistics will cease to be a subsidiary of the company, Keppel stated.

In a separate statement, Keppel T&T chief executive officer Thomas Pang said that Keppel Logistics is Keppel T&T's "non-core business that has been operating at a sub-scale level", and parting with it will "enhance" earnings.

Following the divestment, Keppel T&T's priority would be to scale up in the focus areas of sustainable data centre solutions and subsea cable systems, he added. The transaction will also unlock capital that can be deployed to fund Keppel Group's growth initiatives, he said.

Under the deal, Geodis, a global logistics company, will pay about $70 million of the amount in cash. The remaining $10 million will be placed in an escrow account to be released to Keppel T&T upon the fulfilment of certain performance targets in 2022 and 2023, Keppel said.

The sum, which values Keppel Logistics at an enterprise value of $150 million on a cash-free, debt-free basis, was arrived at on a willing-buyer, willing-seller basis. It takes into account Keppel Logistics' financial position, business prospects and enterprise value of $150 million, as well as its net asset value attributable to the sale shares, which was approximately $72.6 million as at Dec 31, 2021, it added.

For the 2021 financial year, the Keppel Logistics entities that divested to Geodis registered a net loss after tax of $5.2 million. Keppel stated in the statement that Keppel T&T will continue to seek opportunities to monetise its remaining non-core logistics assets and operations after divesting Keppel Logistics.

Keppel, meanwhile, declared that none of the directors and controlling shareholders of the company has any interest, direct or indirect, in the proposed divestment, other than through their shareholding interests, if any, in the company.

It also said that the proposed divestment is not expected to have any material impact on the net tangible assets or earnings per share of the company for the current financial year.

Keppel shares closed down seven cents or 1.1 per cent at $6.42 before the announcement on Thursday.