Metal detection and radio technology developer Codan (ASX:CDA)
has told investors the company intends to offload its mining-focused tracking division Minetec to Caterpillar.
The transaction is comprised of an upfront consideration of an estimated $18 million and a deferred consideration subject to volume milestones for a five-year period.
Minetec is a provider of high-precision tracking devices effective in navigating and exploring underground structures. The business has shared a collaborative relationship for master development and marketing with buyer Caterpillar since 2018.
Codan rues the company’s inability to adequately support Minetec’s development to reach the subsidiary’s full potential and expansionary vision. Hence, the $3.3 billion company believes it has found the right suitor to take the helm of Minetec
“We believe that Caterpillar is the more appropriate owner, as they continue to be the market leading supplier to the mining industry, with an extensive global dealer network covering 172 dealers across 190 countries”.
If successful, the deal will enable Caterpillar to optimise Codan’s manufacturing capabilities to ensure a stable output of products for a period of up to five years.
Codan will redeploy the proceeds from the sale to reduce its debt used to purchase Domo Tactical Communications and Zetron.
Shares in Codan (ASX:CDA)
are trading 0.4 per cent higher at $18.60