De La Rue rises as the firm distances itself from its paper business

 
Courtney Goldsmith
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De La Rue's paper business makes the paper banknotes and passports are printed on (Source: Getty)

Shares in De La Rue rose nearly four per cent today after the banknote maker revealed it had sold a majority stake in its paper business as it shifts its focus to technology.

UK buyout firm Epiris will acquire a 90 per cent stake in the firm's paper business, which is to be named Portals De La Rue, for £61m. De La Rue will hold the remaining 10 per cent of the new firm, which produces paper for banknotes and passports.

The London-listed company is working through a five-year strategic plan to transform into a technology-led identification business and move away from cash printing.

Read more: De La Rue shares rise after it says it will acquire DuPont Authentication

"This transaction strengthens our balance sheet and enables us to invest further in technology and the strategic growth areas of security features, polymer, identity solutions and product authentication," said chief executive Martin Sutherland.

"In Epiris, we have found a strong partner with extensive experience in the banknote substrate market that will have a singular focus on growing the paper business for the long term," Sutherland said.

Under the agreement, Portals will commit to supply pre-agreed volumes of paper to De La Rue at an agreed price for the next ten years, allowing De La Rue to limit its exposure to the external paper market.

De La Rue expects to be hit with £4m in exceptional costs in the 2017/18 year in relation to the transaction, and it will also book a non-cash provision of £4m for the possibility that certain prescribed conditions may not be met.

The transaction is expected to complete within the first half of 2018.

Read more: De La Rue shares leap as full-year profit is seen beating expectations

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