Industrial components company Essentra (GB:ESNT) announced that it has sold its filters division to transform itself into only a component manufacturer – and in the wake of the announcement, stock was trading up by 15% yesterday.
The stock has lost 37% of its value in the year so far.
The company also announced the departure of chief executive, Paul Forman, who will step down at the year’s end. He will be replaced by Scott Fawcett, who is currently heading the company’s components division, in January 2023.
The sale was followed by the sale of its packaging division to Mayr-Melnhof Group in June 2022, as a part of its strategic review launched in 2021. Under this review, the company is targeting itself as a “pure-play components business”.
Essentra sold its filter business to Frank Acquisition Four, owned by Centaury Management for £262.1 million.
The company will use the sale proceeds to clear its debt and also return £150 million to its shareholders via a special dividend.
What does Essentra do?
Essentra is a manufacturer and distributor of parts and components used in different industries such as automotive, equipment, fabrication, electronics, and construction.
The company has 13 manufacturing facilities, and it operates in 25 countries globally.
View from the city
According to TipRanks’ analyst consensus, Essentra stock has a Moderate Buy rating, based on one Buy recommendation.
The ESNT target price is 310p, which shows an increase of 43.8% from the current price.
Conclusion
According to the company, the sale of these two divisions is mentioned as in the ‘best interest’ of its shareholders.
The company said, “After completion of the sale of the Filters business, Essentra will be established as a pure play components business, with a healthy balance sheet, providing flexibility to pursue organic and inorganic growth opportunities.”
