Florida-based Jabil Circuit Inc. said it would sell its warranty repair business in a deal valued at $275 million. The contract electronics maker is exiting the asset as it focuses on its manufacturing operations.
According to a report by Reuters, Jabil will sell its warranty repair unit to American business process services company iQor Holdings Inc. The business, also known as aftermarket services, accounted for about 6% of Jabil's total revenue of $18.3 billion last year.
JPMorgan Chase & Co. is Jabil's financial adviser for the deal, while Holland & Knight LLP is its legal council. The deal is expected to close in the third quarter of 2014, the report said.
Meanwhile, Jabil forecasts second-quarter core earnings of 5-10 cents per share on revenue of $3.5 to $3.7 billion. It also expects revenue to fall by 25% in its diversified manufacturing services and high velocity businesses, Reuters said.
Jabil attributes the expected revenue decline in the high velocity business to the winding down of its business with BlackBerry. Jabil in September said it could part ways with the struggling Canadian smartphone maker, the report said.
The high velocity business designs and markets products for devices and gadgets such as mobiles, set-top boxes and printers. Among Jabil's customers are Apple Inc. and Cisco Systems Inc., Reuters wrote.
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