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If shareholders approve the sale, Cardno (ASX: CDD) will only be left with its Latin American operations which it also expects to offload by the end of 2022.
Brisbane-based engineering and consulting group Cardno (ASX: CDD) has agreed to sell its international development division to DT Global Australia for $56.5 million, with the bulk of proceeds set to be redistributed to shareholders.
The agreement comes after Cardno announced an extensive global strategic review of its remaining operations last November following the sale of its US and Asia Pacific divisions to global professional services provider Stantec Inc. (NYSE: STN) in October for $667 million.
Consisting of Cardno Emerging Markets (Australia), Cardno UK, and Cardno Emerging Markets USA, the deal for the international division, which contributed over 33 per cent of Cardno’s revenue during 2021, represents a sale value of $1.45 per share – roughly 5 per cent lower than Cardno’s closing share price on Friday 25 March.
“Cardno International Development has played an important role in the delivery of practical, innovative and sustainable solutions in international development for more than 50 years,” Cardno chairman Michael Alscher said.
“We would like to thank the management team and staff of Cardno International Development for their work in helping Cardno become a market leader known for its breadth of expertise.
“The transaction with DT Global not only represents an attractive financial outcome for Cardno shareholders but also ensures DT Global will continue delivering the important work of Cardno International Development, backed by their more than 60 years’ experience in supporting aid and development imperatives globally.”
An extraordinary general meeting (EGM) will be held at the end of May to vote on the deal, with the Cardno board unanimously agreeing that DT Global Australia’s offer represents the best interests of shareholders.
Cardno’s 56 per cent shareholder Crescent Capital Partners has announced its intention to vote in favour of the agreement in the absence of a superior offer.
The Brisbane-based business is proposing to distribute the $56.5 million made from the sale of the division to its shareholders through a mixture of a capital return and an unfranked dividend.
Cardno will continue to operate its Latin American (Entrix) business after the sale, but hopes to wind down its South American operations by December 2022. The company still expects to generate revenue during this process, but the actual amount remains uncertain.
Based out of Adelaide, DT Global Australia, a subsidiary of Washington-based DT Global L.P., offers development services to businesses in a wide range of industries.
"We are looking forward to this opportunity to combine the skills and expertise of DT Global and Cardno International Development so that we can create impact and transform lives together,” DT Global's CEO Torge Gerlach said.
“Building on our 50 plus years of experience and our global network of technical experts, Cardno International Development’s future integration into DT Global serves as a tremendous opportunity to provide superior global offerings for our clients and stakeholders.
“We are excited by the possibilities this combination can deliver, and we look forward to welcoming our Cardno International Development colleagues into the DT Global family."
Shares in Cardno (ASX: CDD) have jumped more than 10 per cent to $1.68 during the first half-hour of trading since the announcement.
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