PROVIDENCE, R.I. (AP) -- Industrial conglomerate Textron Inc. said Thursday it has reached an agreement to sell its fluid and power business to U.K.-based Clyde Blowers Ltd. for up to $645 million, marking its exit from the pump and power transmission industries.
Under the deal, Clyde Blowers, a materials handling, transportation and logistics and pump technologies business, will pay Textron about $526 million in cash. Textron also will receive a six-year $28 million note and as much as $50 million based on final 2008 operating results primarily payable in a six-year note.
Additionally, Clyde Blowers will assume about $41 million of employee-benefit liabilities, Textron said.
Textron's Fluid and Power business is projected to generate about $675 million in revenue this year. Beginning in the third quarter, it will be treated as a discontinued operation, reducing full-year 2008 earnings by about 15 cents per share.
In July, the company forecast a full-year profit of $3.80 to $4 per share. Analysts anticipate 2008 earnings of $3.95 per share, according to a poll by Thomson Reuters.
The transaction is expected to generate an after-tax gain of about $85 million. After-tax cash proceeds at closing are expected to be about $350 million, with Textron applying about half the cash proceeds from the sale to a share repurchase.
The deal, which includes the sale of all four Textron fluid and power product lines, is expected to close by the end of the year, pending regulatory reviews and approvals.
Shares of Textron traded at $37.46, up 20 cents, in morning trading.