Sims Limited (“Sims” or the “Company”) has entered into a binding agreement to sell its UK Metal business (“UKM”) to Unimetals Group Limited (“Unimetals”) for approximately £195 million (circa A$385 million) in post-tax cash proceeds. This sale concludes the strategic review initiated on 22 November 2023. The transaction, which includes 28 facilities and four shredders, represents a significant premium over the net carrying value and is expected to complete by the end of Q1 FY25, pending regulatory approvals. Unimetals will assume responsibility for UKM employees. Post-transaction, Sims’ Metal portfolio will focus on Australia, New Zealand, North America, and its 50% stake in the SA Recycling Joint Venture.
Additionally, Sims announced a letter of intent to sell its remaining interest in CLP Circular Services Holdings LLC for approximately US$32 million, despite recognizing a loss of A$48 million in FY24. The overall divestment has generated an A$56 million gain for Sims.
Commenting on the transactions, Sims CEO and Managing Director Stephen Mikkelsen said:
“We conducted a comprehensive strategic review of UKM, evaluating all options, including a sale, forming a joint venture, or restructuring the business. The Board concluded that a sale provided the optimal outcome for Sims and its shareholders.
By focusing on high-potential markets such as the United States, Australia, and New
Zealand, where our business position and demand for scrap are stronger, we can effectively leverage our strengths and drive sustainable growth. In NAM, we have launched operational and commercial improvement programs aimed at improving efficiencies and margin. These efforts are already yielding positive results. We are also focused on growing our Sims Lifecycle Services business.
We are pleased to have secured this transaction with Unimetals and the potential sale of our interest in Circular Services. This brings to a conclusion a program of divestment that commenced in 2022.
We believe that divesting UKM and Circular Services unlocks significant value for shareholders, which is not reflected in the current share price. Between the two sales announced today, we will realise after tax cash proceeds of approximately A$435 million, which will be received in the first half of FY25.
The proceeds will initially be used to strengthen our balance sheet and, over the medium term, we will look to balance the requirement of balance sheet strength and flexibility, with growing the refocussed business, and returns to shareholders.”
Source intelligentinvestor.com.au
