Smartcard operator ERG has confirmed its sale of subsidiary, Proton World, crystallising a $50 million loss on an investment less than two years old.
The Perth-based technology group told the stock exchange it had sold the Belgian company to STMicroelectronics of Geneva for $110 million.
After the settlement of "inter-company accounts" and an undisclosed payment for ongoing global rights to use Proton technology in its smartcards, ERG had settled for a cash lump sum of $60 million.
A deferred, 10-year milestone fee arrangement, put in place at the time of ERG's acquisition of Proton, remained intact.
Based on ERG's share price, that deferred payment is currently worth about $40 million.
Analysts covering the stock said they were disappointed with the lower than expected cash settlement.
Most had expected that Proton would be sold for closer to $110 million before taking the milestone payment into consideration.
Earlier this month, the smartcard group, which was recently given the contract to overhaul the NSW public transport ticketing system, posted a first-half loss of $124.9 million. This included what the company described as a recoverable $52.4 million write-down of Proton.
Yesterday, ERG chief executive Peter Fogarty said the sale to STMicroelectronics enabled the group to retain global access to the Proton technology for the next 20 years as well as returning $60 million to the group's core business.
"It also improves operating results by eliminating approximately $15 million in annual goodwill amortisation charges and removing the need to fund Proton's R&D," he said.