PPK Group has inked a conditional deal to sell its near 40% interest in Craig International Ballistics to German defence firm Mehler for a headline price of A$27.45 million plus a potential earn-out. Completion is targeted by June 30, 2026, subject to regulatory and contractual conditions.
- Conditional sale agreement signed with Mehler for 39.85% stake in Craig International Ballistics
- Headline purchase price of A$27.45 million plus earn-out capped at A$5.98 million
- Completion expected by 30 June 2026, pending regulatory approvals
- Proceeds partly earmarked to repay secured loan, remainder subject to strategic review
- Transaction aligns with PPK’s ongoing portfolio reshaping and value maximisation strategy
PPK Moves to Exit Ballistics Stake Amid Portfolio Overhaul
PPK Group Limited (ASX:PPK) has agreed to sell its 39.85% holding in Craig International Ballistics (CIB) to German armour specialist Mehler Vario Systems GmbH, signalling a notable shift in PPK’s investment focus. The headline price for the stake is A$27.45 million, with an additional earn-out potential of up to A$5.98 million, bringing total proceeds to as much as A$33.43 million.
The conditional share sale and purchase agreement (SPA) sets a June 30, 2026 deadline for completion, subject to customary conditions including foreign investment approvals under the Foreign Acquisitions and Takeovers Act. PPK’s subsidiary BNNT Ballistics holds the stake being sold.
Earn-Out Hinges on Future EBITDA Performance
The earn-out component depends on CIB achieving an average adjusted recurring EBITDA exceeding A$12 million annually over 2026 and 2027. Should this threshold be surpassed, PPK stands to receive a proportionate payment capped at just under A$6 million, payable in the second quarter of 2028.
This structure introduces some uncertainty to total proceeds, reflecting confidence in CIB’s ongoing earnings potential under Mehler’s ownership while capping PPK’s upside.
Proceeds to Address Debt and Strategic Review Outcomes
PPK plans to allocate approximately A$2 million from the sale proceeds to repay a third-party loan secured against part of its CIB stake. The remainder will be held pending the results of a broader strategic review of PPK’s portfolio, which has already seen recent disposals and investments.
Chair Anne-Marie Birkill highlighted that the sale aligns with PPK’s strategy to realise value from its investments, referencing previous portfolio moves such as the sale of AMAG and adjustments to stakes in Li-S Energy and White Graphene Group. This latest transaction follows the company’s recent $10.5M profit on Li-S Energy boost, underscoring a period of active portfolio reshaping.
Mehler’s Acquisition to Support CIB’s Global Growth Ambitions
Mehler, with over 40 years in armour ballistic protection and 1,500 employees worldwide, is expected to leverage its global platform to expand CIB’s reach and capabilities. PPK’s Chair expressed confidence that Mehler’s acquisition would unlock further growth potential for CIB, while wishing the existing management team well.
Completion of the deal remains contingent on finalising warranty and indemnity insurance, ancillary agreements with key personnel, and regulatory clearances, leaving the timeline subject to potential delays.
Bottom Line?
PPK’s conditional divestment of its CIB stake marks a clear pivot in its portfolio strategy, with future capital deployment hinging on the ongoing strategic review and regulatory outcomes.
Questions in the middle?
- Will PPK deploy sale proceeds into new growth areas or return capital to shareholders?
- How will Mehler’s ownership impact CIB’s operational and financial trajectory?
- What are the chances the earn-out target will be met given market conditions and CIB’s performance?