ST. PETERSBURG, Fla.--(BUSINESS WIRE)--Jabil Circuit, Inc. (NYSE: JBL) today announced that it has completed the sale of its aftermarket services business to iQor Holdings, Inc. for $725 million subject to certain customary closing adjustments and other items. Certain regulatory approvals are still pending in connection with the sale of the Malaysian operations, which resulted in $20 million being held in escrow until the closing of the Malaysian operations. The definitive agreement was announced on December 17, 2013.
“We are pleased to finalize this transaction. Although this business has been a wonderful asset to Jabil over the past many years, this divestiture provides us additional financial flexibility to potentially add more strategic capabilities which we will leverage within our core manufacturing businesses,” said Mark T. Mondello, Jabil’s CEO.
Of the $725 million purchase price, $675 million is cash and $50 million is senior nonconvertible preferred stock of iQor that accretes dividends at an annual rate of 8 percent and is redeemable in nine years or upon a change in control. In connection with the decision to sell this business, for all periods presented, the operating results associated with this business have been reclassified into Discontinued Operations –– net of tax in the Condensed Consolidated Statements of Operations, and the assets and liabilities associated with this business has been reflected in the Condensed Consolidated Balance Sheets as assets and liabilities of discontinued operations.
J.P. Morgan is serving as the exclusive financial advisor to Jabil and Holland & Knight LLP is acting as Jabil's legal counsel in this transaction.
Jabil is a product solutions company providing individualized-focused supply chain solutions, comprehensive design, and manufacturing services to customers in a broad range of industries. Jabil common stock is traded on the New York Stock Exchange under the symbol, “JBL”. Further information is available on Jabil’s website: jabil.com.
FORWARD LOOKING STATEMENT: This news release contains forward-looking statements, including those regarding the closing of the sale of the Malaysian operations and Jabil's financial flexibility to potentially add more strategic capabilities to leverage within core manufacturing businesses. The statements in this news release are based on current expectations, forecasts and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to: the Preferred Stock proving to have a value substantially less than the stated $50 million face value or not being redeemed in full in nine years; the exclusive service agreement and limited covenant not to compete could impair Jabil's ability to attract and retain customers; if not beneficial to AMS customers, the exclusive aftermarket service agreement with iQor could negatively impact Jabil's business with common customers; changes to Jabil's strategic focus; changes to Jabil's acquisition strategy and philosophy; fluctuations in our stock’s market price; fluctuations in operating results and cash flows; unexpected, adverse seasonal impacts on demand; changes in macroeconomic conditions, both in the U.S. and internationally; our financial performance during and after the current economic conditions; our ability to maintain and improve costs, quality and delivery for our customers; risks and costs inherent in litigation; whether our realignment of our capacity will adversely affect our cost structure, ability to service customers and labor relations; our ability to take advantage of perceived benefits of offering customers vertically integrated services; changes in technology; competition; anticipated growth for us and our industry that may not occur; managing rapid growth; managing rapid declines in customer demand and other related customer challenges that may occur; our ability to successfully identify and consummate acquisitions and divestitures; managing the integration of businesses we acquire; risks associated with international sales and operations; retaining key personnel; our dependence on a limited number of large customers; business and competitive factors generally affecting the electronic manufacturing services industry, our customers and our business; and other risks, relevant factors and uncertainties identified in our Annual Report on Form 10-K for the fiscal year ended August 31, 2013, subsequent Reports on Form 10-Q and Form 8-K and our other securities filings. Jabil disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.