In a significant strategic shift, Conduent Incorporated (Nasdaq: CNDT), a global provider of technology-driven business solutions, has announced a definitive agreement to sell its Tolling business, part of the Conduent Transportation division, to Quarterhill Inc. (TSX: QTRH) (OTCQX: QTRHF) for a purchase price of $70 million in cash. The transaction, expected to close by the end of 2026, aligns with Conduent's ongoing efforts to streamline its portfolio and enhance its focus on core business operations.

2. Financial Implications of the Sale

The sale agreement stipulates that Quarterhill will assume most liabilities associated with the Tolling business, including all surety bond obligations. This transition is anticipated to bolster Conduent's financial profile, enhancing its financial flexibility and reducing exposure to non-core obligations. The move is expected to support Conduent's goal of strengthening its balance sheet and increasing sustainable free cash flow, as articulated by Harsha V. Agadi, President and CEO of Conduent.

“This Tolling transaction, alongside the previously announced Public Transit agreement, advances our strategy to simplify our portfolio, sharpen focus on our core businesses, and strengthen our financial foundation,” Agadi stated.

3. Enhancing Core Business Focus

This decision follows a separate announcement in May regarding the sale of Conduent's Public Transit business, also part of the Transportation division. Together, these transactions are designed to simplify Conduent’s operations and enhance the predictability and durability of its earnings profile.

Conduent’s Tolling business has a robust operational footprint, facilitating over 14 million tolling transactions daily through mission-critical technology that includes all-electronic tolling, roadside and back-office processing, image review, violation enforcement, and analytics. By divesting these non-core segments, Conduent aims to sharpen its focus on its primary business segments and enhance overall operational efficiency.

4. Partnership with Quarterhill

As part of the transaction, Conduent will receive a 7% equity interest in Quarterhill Inc., complete with registration rights and board observer rights. This arrangement offers Conduent potential upside participation in the future growth of Quarterhill, a leading player in the Intelligent Transportation System (ITS) industry.

Quarterhill is well positioned to integrate the Tolling business into its operations, leveraging its extensive experience in the sector. The company’s expertise in providing intelligent transportation solutions is expected to facilitate a smooth transition for both clients and employees.

5. Looking Ahead

The anticipated closing of this transaction before the end of 2026 marks a pivotal moment for Conduent as it reshapes its business focus and strengthens its financial position. The strategic realignment underscores Conduent's commitment to long-term value creation and operational excellence.

With this move, Conduent is poised to enhance its core competencies and customer offerings, ensuring that it continues to deliver value to clients across various sectors, including government and commercial enterprises. The company remains dedicated to providing high-quality services while navigating this significant transition.

As the deal progresses and additional details emerge, stakeholders will be keenly watching how these changes impact Conduent's operational landscape and financial performance in the coming years.

Original press release