Boston, MA 12/20/2013 (wallstreetpr) – Jabil Circuit, Inc. (NYSE:JBL) continues its non-core business divestment with the sale of its warranty business for $725 million. This is as per the report carried by the Wall Street Journal. The Journal also reported that the aftermarket unit will be sold to iQor Holdings Inc. after the company’s board approves the deal.
Jabil Circuit, Inc. (NYSE:JBL) hopes to use the proceeds from the sale of the unit, to improve its capacity and support its diversification efforts in the high-margin operations. JBL started offering electronic-warranty services in somewhere about 1999, following its $30 million acquisition of an aftermarket-oriented business. Throughout this period, JBL is seen expanding and improving revenues from its warranty business and it was able to contribute about $1.1 billion in revenue to its full-year aggregate revenue in the last fiscal year.
But according to Jabil Circuit, Inc. (NYSE:JBL)’s Chief Executive Officer Mr. Mark T. Mondello, the aftermarket business is not in their strategic focus on diversified manufacturing, and hence the need to sell it.
The specific deals about the transaction are yet to be clear, especially as to whether the deal is an all-cash transaction or stock is involved. However, it is sure that that by moving away from its warranty business, JBL would be able to improve its financial flexibility to enable itself more investments and share repurchase.
With regard to the buy back plans, Jabil Circuit, Inc. (NYSE:JBL) has announced that it will spend about $200 million in the next 12 months on this account.
