Jabil Inc JBL reached a preliminary deal with Chinese EV maker BYD Co., Ltd.BYDDF BYDDY BYD Electronic (International) Company Limited for the sale of its Mobility business in a potential transaction worth $2.2 billion.
CEO Kenny Wilson said, "If completed, the proceeds from this transaction will enable us to enhance our shareholder-centric capital framework, including incremental share buybacks. Additionally, it will provide opportunities for further investment in electric vehicles, renewable energy, healthcare, AI cloud data centers, and other end-markets," he added.
Jabil Circuit, which manufactures printed circuit boards, established a unit this month that absorbed its product-manufacturing businesses in Chengdu and Wuxi, which will now become a part of the Chinese group.
Although now best known for its electric vehicle business, BYD started by selling electronic components.
Citi analysts believed the deal involved Jabil's Green Point metal casing operations in Wuxi and could see BE further penetrating Apple Inc's AAPL casing supply with higher market share, Reuters reports.
BE will likely have to fund the acquisition with loan and equity issuance, the analysts said.
In June, Jabil reported third-quarter FY23 revenue growth of 1.8% year-on-year to $8.48 billion, beating the consensus of $8.20 billion.
Jabil's adjusted EPS of $1.99 beat the consensus of $1.87.
Price Action: JBL shares traded higher by 6.57% at $110.00 premarket on the last check Monday.
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