The CIMIC Group Ltd (ASX: CIM) share price is edging higher on Thursday following the release of a positive announcement.
At the time of writing, the engineering company's shares are up 0.25% to $25.15.
What did CIMIC announce?
This morning CIMIC provided an update on the sale of 50% of its Thiess business to funds advised by Elliott Advisors.
Elliott is one of the oldest fund managers of its kind under continuous operation and manages more than US$40 billion in assets. This includes equity positions in private and listed companies in Australia and globally.
Thiess delivers open cut and underground mining in Australia, Asia, Africa and the Americas. It provides services to 25 projects across a range of commodities and has a diverse fleet of plant and equipment of more than 2,200 assets, a team of around 14,000 employees, and generates annual revenues in excess of A$4.1 billion.
According to the release, the company has signed all relevant material documentation including financing agreements, for the sale of the world's largest mining services provider. This encompasses the satisfaction of a number of conditions precedent, including the required regulatory approvals.
Management advised that the transaction completion, including receipt of cash proceeds, is expected to occur prior to the end of 2020.
How much will CIMIC receive for Theiss?
The company confirmed that the price it has agreed for 50% of the equity interest in Thiess implies an enterprise valuation of approximately A$4.3 billion (based on 100% of Thiess).
The transaction is expected to generate a pre-tax gain for CIMIC of around A$2.2 billion, and a post-tax gain of around A$1.4 billion. This remains subject to certain adjustments
CIMIC's Executive Chairman, Marcelino Fernández Verdes, previously commented: "The sale agreement reflects Thiess' ongoing strategic importance as a core activity for CIMIC. It capitalises on the robust outlook for the mining sector and, together with Elliott, we will pursue market opportunities in line with Thiess' growth and diversification strategy."
