RICHMOND, Va. (AFX) - Tobacco processor Universal Corp. said Thursday that it has agreed to sell the non-tobacco businesses of its subsidiary, Deli Universal Inc., for about $540 million.
The businesses will be a sold to a new company that will be owned by NIBC Principal Investments, which is a part of NIBC Bank NV, a Netherlands-based merchant bank, and managers of Deli Universal's non-tobacco businesses.
Universal said it expects the sale to result in net proceeds of about $520 million, including cash and the assumption of debt.
The cash proceeds will be used to reduce debt at closing, but the company's board will consider resuming Universal's stock buyback program based on market conditions and the performance of its business.
Universal expects to record an after-tax loss related to the sale, set to close this fall, of about $25 million in the second quarter of 2007.
Deli's non-tobacco businesses include Universal's lumber and building products distribution business segment, and most of its agri-products segment, including rubber and food trading, tea, and sunflower seeds.
Universal is retaining its dried fruits and nuts business in the U.S. and London. Deli's non-tobacco businesses had revenue of $1.4 billion in the fiscal year that ended March 31.
Deutsche Bank is acting as financial adviser to Universal in the deal.
Universal shares closed up 2 cents at $36.15 on the New York Stock Exchange.
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