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Manufacturing and product design company Jabil (JBL) is launching higher after announcing that it has entered into a preliminary agreement to sell its mobility business to China-based BYD Electronic Company for about $2.2 bln. The companies have agreed to complete due diligence on the deal before finalizing the terms of the transaction, but the idea of JBL divesting the mobility unit is clearly resonating with market participants.

• By divesting the mobility business, which makes components and encasements for devices -- including for Apple's (AAPL) iPhones and iPods -- JBL would lower its exposure to the sluggish consumer electronics market. At about $4.4 bln in annual sales (10-12% of total sales), the mobility unit is a significant piece of JBL's overall business. 
• JBL would also lessen its dependence on Apple (AAPL), which accounts for nearly 20% of the company's revenue, and it would reduce its geopolitical risk as the divestiture would include the sale of its manufacturing facilities in China. 
• What market participants are especially excited about, though, is that JBL intends to use the sale proceeds to further invest in its higher growth opportunities. This most notably includes a booming automotive business that posted 60% revenue growth last quarter. In particular, EV growth continues to be robust with JBL commenting during last quarter's earnings call that its growth is "limited only by the pace at which we can scale up production across multiple geographies with several OEMs."
• The automotive end market, combined with strength in other secular growth areas like renewable energy infrastructure and cloud computing, enabled JBL to deliver strong upside Q3 results in mid-June. However, the company continues to take a conservative approach with its outlook -- Q4 EPS and revenue guidance was merely in line with expectations -- due to lower demand in its consumer facing markets, such as smartphones. With an exit from the mobility business, JBL's outlook should turn more bullish.
• Lastly, JBL also plans to use a portion of the proceeds for share buybacks, which is always music to investors'' ears.

The main takeaway is that the proposed divestiture of JBL's mobility business looks attractive on several accounts, but the main reason being that it would likely enhance its margin and earnings growth profile as the focus increases on stronger end markets like EVs and cloud computing.