(By Balaseshan) Federal Signal Corp. (NYSE:FSS) said it has agreed to sell its Federal Signal Technologies LLC business to 3M Co. (NYSE:MMM) for $110 million in cash, in a step to reduce its debt.
Federal Signal plans to use the proceeds from the transaction primarily to reduce debt. The transaction is subject to closing conditions and regulatory approvals, and is expected to be completed in the second half of 2012.
The Federal Signal Technologies (FSTech) business focuses on intelligent transportation solutions. FSTech's hardware and software products are used in electronic tolling, parking and access control, law enforcement, and many other innovative applications such as electronic vehicle registration.
The company expects this transaction to benefit in two important ways: first, it will enable Federal Signal to transform its balance sheet, and second, it will allow the company to bring more focus to driving profitable growth in its core businesses of industrial and municipal equipment and safety and security solutions.
Federal Signal's Chief Executive Dennis Martin said the sale of FSTech business to 3M presents the best opportunity to maximize FSTech's value for Federal Signal shareholders, and complements 3M's global portfolio.
Federal Signal intends to intensify its commitment to new product development and excellence in customer service, and to expand certain businesses in response to the increasing global market demand for improved security and warning systems.
Jefferies & Co., Inc. advised Federal Signal on the transaction, and Thompson Coburn LLP served as Federal Signal's legal counsel.
FSS closed Wednesday's regular session down 1.86% at $4.74, while MMM ended down 0.32% at $87.54.