Investing.com -- Shares of Temenos Group AG (SIX:TEMN) edged up 1% following the announcement of the disposal of its Multifonds unit for an enterprise value (EV) of approximately $400 million.
The news confirms earlier financial press speculation from the summer of 2024 about a potential sale, with a Bloomberg article dated July 17, 2024, hinting at the transaction.
The sale of Multifonds, which is estimated to contribute around 6% to Temenos's group revenue, represents a similar proportion of the company's EV. The decision to offload what is considered a non-strategic asset at a valuation consistent with the broader group's has been perceived positively by the market, as it aligns with Temenos's strategic focus and financial health.
Analysts have reacted to the news by speculating on the potential uses for the proceeds from the sale. A comment from Jefferies suggests that investors' attention at the upcoming results will "inevitably focus on uses for the cash proceeds. We think it is reasonable to assume some form of buy-back (at least partial) is a realistic scenario."
This statement indicates that a share buy-back could be on the horizon, which typically serves to increase shareholder value by reducing the number of shares outstanding and potentially improving earnings per share.
The disposal is seen as a "sensible step forward" for Temenos, as it refocuses its business and capital allocation.
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