Urban infrastructure specialist Aegion (NASDAQ: AEGN ) is pulling out of Germany.
On Wednesday, Aegion announced that it has sold its 50% interest in German joint venture Insituform Rohrsanierungstechniken GmbH to Denmark's Per Aarsleff A/S.
Per Aarsleff's purchase price of $18.3 million values the 50% interest at just under 0.4 times the $93.9 million in sales that the unit recorded in 2012. In this regard, Aegion appears to be unloading its stake at a sizable discount to its on shares' P/S ratio of 0.8.
However, Aegion noted that as part of the deal, it is at least retaining a supply agreement whereby it can count on Insituform-Germany continuing to buy about $3.6 million of Aegion's cured-in-place piping annually over the next two years.
Explaining its exit, Aegion noted that it has tired of dealing with the "highly competitive and fragmented" German market, and accepting "contracting returns of Insituform-Germany," where profits "have languished for a number of years."
Rather than continue to struggle there, Aegion Senior VP for Water and Wastewater Thomas E. Vossman said the company would rather get rid of "an underperforming business unit and ... focus its resources and efforts on higher return businesses and stimulate growth of third-party product sales in Europe."