(Alliance News) - KME Group Spa announced Monday that its subsidiary KME SE has signed a letter of intent related to the special products business led by Cunova GmbH, in which KME SE, in January 2022, had sold a 55 percent stake to German investment fund The Paragon Fund III GmbH & Co. geschlossene Investment KG.

KME SE, Paragon and SDCL EDGE Acquisition Corporation, an acquisition special purpose vehicle with securities listed on the NYSE, where it has raised USD200 million, signed a non-binding letter of intent regarding a potential business combination between Cunova and SDCL EDGE.

Under the agreement, upon completion of the merger, a newly formed British holding company will have obtained a listing on the NYSE; Paragon will collect all cash from the divestment; and KME SE will not receive cash but will convert the stake held in Cunova into the newly listed shares, further increasing its stake through the contribution of its aerospace business.

This is an engineering business that has many similarities and potential synergies with Cunova's specialty products business; as a supplier to the leading international private aerospace players, it has significant future growth prospects in line with those of the relevant industry.

Under the agreement, it is envisaged that upon closing of the business combination, KME SE will hold a majority stake of about 51 percent in the share capital of the NYSE-listed combined entity, equal to about 46 percent fully diluted upon the eventual exercise of the private and public warrants issued by SDCL EDGE.

"The business combination has an important strategic value for KME Group because it allows it to reacquire the majority of the specialty products business, increasing its potential through the contribution of the aerospace business, resulting in holding control of a business with very relevant prospects from a strategic point of view," said KME Group.

KME Group trades in the green by 0.2 percent at EUR0.99 per share.

By Giuseppe Fabio Ciccomascolo, Alliance News senior reporter

Comments and questions to redazione@alliancenews.com

Copyright 2023 Alliance News IS Italian Service Ltd. All rights reserved.