Smith Electric Vehicles US Inc (SEVUS), the UK-based Tanfield Group’s 49% owned associate (earlier post), has made a £70-million (US$105 million) a non-binding, conditional cash and stock offer for Tanfield’s Smith Electric Vehicle (SEV) division in the UK, the 49% shareholding in SEVUS together with the License Agreement between Tanfield and SEVUS, and the global intellectual property rights.
Any sale would be conditional inter-alia upon negotiation of sale and purchase documentation, a financing by SEVUS, all usual shareholder approvals (including the approval of Tanfield shareholders) and due diligence.
The board of Tanfield has granted SEVUS a four month period of exclusivity for the clarification and negotiation of this offer.
In an equity research note from WH Ireland, analyst Keith Ashworth-Lord notes that:
Whilst DD [due diligence] is always a potential hazard, it seems to us that the highest hurdle here is getting the funding in place. Paying £37m for a business that lost £1.9m on turnover of £8.1m in the first half looks a full price, especially in light of representing a price to peak EBIT of 13 times. You have to say that Tanfield looks to have negotiated a good deal here.
SEVUS currently produces the Newton battery powered truck in the US.