Hills has signed a conditional business sales agreement to divest its security and information technology distribution division to IT and electronic security distributor, Dicker Data, for $A20 million.

According to Hills, the proposed divestment is part of the company’s ongoing strategy to focus on the strong growth prospects associated with the Hills Health Solutions division and technical services operation.

“In recent years, the Distribution division has been adversely affected by COVID-related lockdowns, supply chain delays and worldwide semiconductor shortages,” said Hills chief executive officer David Clarke. “Notwithstanding these external issues, the business’ performance has not met the expectations of the board.

“Our assessment is that the effort and investment required to address revenue declines and improve profitability of this division will provide superior returns if focused on the health technology sector. Ultimately, we have determined that a change of ownership to an
organisation with strong capability in technology distribution and solutions, is in the best interests of the Hills shareholders and the future success of the SIT division, its people, suppliers and customers.

“This divestment continues the company’s efforts to focus our attention and resources on those businesses with the greatest growth potential, most particularly Hills Health Solutions. We are pleased that Dicker Data has committed to taking on all SIT division employees and we thank those employees for their loyalty and service to Hills.”

Under the terms of the BSA, Dicker Data will acquire the business for cash consideration structured as a partial net asset sale. Upon completion Dicker Data will acquire the business, inventory, customer and vendor relationships, employees and their entitlement obligations, and certain other net assets of the SIT division. Hills will retain the Hills brands, and the trade receivables and payables existing at completion.

The purchase price represents a premium to the net assets to be sold and the final amount is largely dependent upon inventory-related balances at the completion date. The price is estimated to be in the range of $20 million. Hills is retaining the Technical Services Division that is currently a part of the broader distribution division and will continue to pursue its existing customer and geographic diversification growth strategy for this technology installation focused business.

The divestment of the SIT division follows Hills’ exit, in late 2021, of its New Zealand security distribution operations. More to follow…

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