STR Holdings Inc. plans to sell its quality assurance business to Underwriters Laboratories for $275 million in cash.
The Enfield, Conn., company said the sale will allow it to focus on its solar power business. STR said it expects the deal to close by Sept. 30 and said it will use the proceeds and some of its existing cash to pay off debt.
Underwriters Labs will gain the business, its employees, facilities, contracts, and intellectual property. STR will continue to own the business' headquarters and will lease the building to UL.
STR said the sale will add about 4 cents per share to its adjusted annual profit starting in 2012.
The quality assurance business will be counted as a discontinued operation, and STR expected it to contribute $120 million to $123 million in revenue in 2011. The company now expects an adjusted profit of $1.05 to $1.15 per share and $261 million to $275 million in revenue for the year. Previously it forecast a profit of $1.12 to $1.22 per share with sales ranging from $381 million to $398 million.
In the third quarter, STR now expects to earn 12 to 16 cents per share on $51 million to $57 million in revenue, down from its previous estimates of 17 to 21 cents per share and $82 million to $90 million.
Analysts expect a STR to report an annual profit of $1.15 per share and $394 million, according to FactSet. In the third quarter they were expecting a profit of 19 cents per share and $85.6 million in revenue.
Shares of STR rose 39 cents, or 3.4 percent, to $11.93 in morning trading.