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(Alliance News) - Melrose Industries PLC said on Monday it has entered into an agreement to sell its Nortek Air Management business - comprising the Nortek Global HVAC and Air Quality & Home Solutions segments - to Chicago, US-based Madison Industries for GBP2.62 billion.
The FTSE 100-listed industrial turnaround specialist said it intends to use part of the net proceeds to reduce debt. It plans to contribute around GBP100 million to the GKN Ltd UK defined-benefit pension schemes, which means that the funding deficit will have been reduced from GBP1 billion to GBP200 million under its ownership.
Melrose owns UK-based engineering firm GKN, who back in January said it was considering closing a Birmingham factory that makes parts for the automotive industry, threatening more than 500 job losses.
Melrose also said it intends to return a portion of the net proceeds to shareholders.
It said it expects completion of the deal to occur in the second or third quarter of 2021, subject to shareholder approval.
"The disposal demonstrates the strength of the Melrose strategy. We bought Nortek, an underperforming group, which we felt had outstanding potential in 2016 for GBP2.2 billion. We have seen approximately USD1 billion of cash inflows from the Nortek group during our ownership, effectively giving us an in-price of USD1.8 billion. The businesses being sold today for GBP2.62 billion represent 73%, by revenue, of the Nortek group and the returns are excellent. Our Ergotron and Nortek Control businesses which also form part of the Nortek group remain under our ownership and will be realised at an appropriate time," said Chair Justin Dowley.
Shares in Melrose were down 0.3% at 178.40 pence in London on Monday.
By Zoe Wickens; zoewickens@alliancenews.com
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