Investment Banking will sell its personal communications division to a unit of AIG Investments for about $240 million, the company said Tuesday.
The sale is aimed at advancing the Alameda company’s plans to maximize its focus on technologies for Internet Protocol telecommunications equipment in rapidly growing economies.
The personal communications division to be sold has primarily focused on distributing mobile phones and related accessories in North America. Its sale, as well as the company’s sale of its mobile solutions business unit, will mark the completion of two milestones in simplifying the operations of UTStarcom, the company said.
“The streamlined business model will provide better transparency into our operations and improved liquidity as we execute our strategic plan,” Investment Banking said Peter Blackmore, who officially became UTStarcom’s president and CEO Tuesday.
UTStarcom (NASDAQ: UTSI) also stands to earn as much as $50 million based on a three-year earn-out provision associated with the agreement, it said.
The transaction, expected to close within two business days, was unanimously approved by UTStarcom’s board and is subject to customary closing conditions including debt financing, the company said.
Once completed, the deal will create Personal Communications Devices LLC, which will be led by the management team currently leading the personal communications division. Those managers will become part owners of the company with AIG Vantage Capital and other investors.
“Operating as a standalone business will afford the new company greater distribution and financial flexibility and better positions us to capitalize on emerging market trends and strategic growth opportunities,” stated Philip Christopher, the division’s president.
Tags: Investment Banking