NN, Inc. (NNBR) recently came to an agreement of selling its Life Sciences division to American Securities LLC’ affiliated company.
The divestment deal is worth $825 million which is likely to be completed before end of this year subject to the fulfillment of customary closing conditions.
As per agreed deal, the Life Sciences division of NN will become part of MW Industries which is an affiliate company of American Securities.
MW Industries is a leading provider of bellows, machined parts, specialty fasteners, highly-engineered springs, and other precision components. On the other end, NN’s Life Sciences division serves the orthopedics and surgical end markets providing them with products and services. The division saw its sales dropped by 20.7% year over in the second quarter because of the pandemic.
The transaction has a total value of $825 and is comprised of two components. As part of first component, NN will receive an amount of $775 million in cash at the closure of the deal. The second component of the deal is related to the earn-out part, under which NN will get $70 million which is based on the performance of divested division in 2022.
The divestment is aligned with NN’s strategy of making its balance sheet stronger, providing the company with more flexible financial position and improving company’s value for the shareholders. Company is likely to be getting net proceeds of $700 million for which company is in believes of getting 1.8X net leverage after completion of the deal.
NN is considering the divestment of Life Sciences division as helping in concentrating on the growth of other business areas. The areas NN will better concentrating on include Power Solutions and Mobile Solutions. NN is likely to be achieving the annual sales target of $600 million in next five years with the help of its diversified industrial platform.