NCR has announced that its Board of directors has unanimously approved a plan to separate NCR into two independent publicly traded companies – one focused on digital commerce business and the other on ATM business.
The separation is intended to be structured in a tax-free manner and is targeted for the end of 2023.
Earlier in the year, NCR Corporation pursued a comprehensive strategic review process with outside advisors’ assistance to evaluate a full range of strategic alternatives to enhance shareholder value.
After completing the proposed spin-off, the digital commerce business will continue with its Retail, Hospitality, Merchant Services, and Digital Banking businesses.
On the other hand, the ATM spin-off will focus on its global ATM-as-a-Service and ATM network business.
The separation transaction will follow the satisfaction of customary conditions, including the effectiveness of appropriate filings with the US Securities and Exchange Commission and the completion of audited financials. The NCR Board of Directors engaged Bank of America Securities, Goldman Sachs, and Evercore Group as financial advisors during the strategic review process.
Although the company is assessing key aspects of both new entities, including potential cost-saving opportunities, management teams, Boards, capital structures, and capital return policies, the Board remains open to all strategic alternatives until the completion of the transaction, including a sale of the whole company or individual segments.
NCR has continued to shift from a hardware-centric brand to a software-as-a-service company with a higher shift to recurring revenue streams in recent years.
However, NCR’s stock price did not reflect the substantially improved operational performance. Due to this, the company initiated a strategic review to explore various options that will rerate the business and maximize shareholder value.
Since the strategic review announcement, the company received takeover interests from various potential buyers, such as Veritas Capital and Apollo Group.
Recently, it became increasingly clear to the Board that, given the current financing markets, management could not deliver a whole company transaction that reflects an appropriate and acceptable value for NCR shareholders. The market reaction was adverse, and NCR’s share price dropped by ~20.3%.
Given the enhancements to its businesses in recent years, the company believes that post-spin-off , both companies will be well-positioned to succeed independently.
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