LONDON (ShareCast) - (ShareCast News) - Specialist distributor Connect Group announced on Tuesday that it has signed an agreement with RM to dispose of its education and care division, for a cash consideration of £56.5m on a cash free, debt free basis.
The London-listed firm said RM will also assume responsibility for the defined benefit pension schemes within education and care which, at 31 August 2016, had a balance sheet deficit of £7.9m.

Total consideration equates to an enterprise value of £64.4m, Connect's board confirmed.

It said the disposal was consistent with its strategy to focus its primary investment on growth opportunities within news and media, and parcel freight.

Education and care's EBITDA for the 12 months to 31 August 2016 was £9.0m, the board confirmed, with adjusted profit before tax of £7.8m, statutory profit before tax of £6.7m, and a gross asset value of £57.4m.

The net cash proceeds of the disposal will reduce group borrowings and provide greater flexibility to pursue growth opportunities that can leverage the Group's scale and strength in specialist distribution, it explained.

Connect Group confirmed the disposal will complete following approval from RM's shareholders and receipt of clearance from the Competition and Markets Authority.

"We are pleased to announce the sale of our education and care division to RM," said group chief executive Mark Cashmore.

"Having received a number of approaches and after conducting a detailed review, we have concluded that the disposal represents the right option for the Group, the division and our strategy."

Cashmore said the disposal will provide the group with greater financial flexibility as it continued to drive its operational priorities and growth strategy.

"Looking ahead, the group remains focused on delivering long-term value for shareholders, deploying our capital to deliver a balance of strong dividend, deleverage and re-investment for further growth."

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