Mail management company Pitney Bowes has announced its intent to sell its software solutions unit to enterprise solutions provider Syncsort for US$700 million in an all-cash deal, as it looks to cut its debt.
Shares of Pitney rose about 7.5 per cent in premarket trading, after the company said it will use the sale proceeds to pay its short-term debt.
"We have several tranches of debt that are maturing over the next two years and we will use the majority of the net proceeds from this transaction to pay down that debt and we will refinance the remainder," said Stan Sutula, executive vice president and chief financial officer.
Pitney cut its 2019 adjusted earnings forecast in the range of 65 cents to 75 cents from 90 cents to $1.05 estimated earlier, and revised its full-year revenue forecast to one to two per cent from one to three per cent.
The cut in earnings forecast reflect the lost business from the sale as well as the impact of the US-China trade war.
Goldman Sachs & Co LLC is serving as financial adviser and Cravath, Swaine & Moore as legal advisor.
The deal is expected to close before the end of 2019.
(Reporting by Neha Malara in Bengaluru; Editing by Shinjini Ganguli)