(Alliance News) - Melrose Industries said Monday it has agreed to sell its Nortek Air Management business - comprising the Nortek Global HVAC and Air Quality & Home Solutions segments - to Chicago-based Madison Industries for around GBP2.62 billion.
Melrose said it intends to use part of the net proceeds to reduce debt and contribute around GBP100 million to the GKN UK defined-benefit pension schemes, which means that the funding deficit will have been reduced from approximately GBP1 billion to GBP200 million under Melrose's ownership of GKN, a UK-based engineering firm. Melrose also said it intends to return a portion of the net proceeds to shareholders.
Completion of the deal is expected to occur in the second or third quarter of 2021 subject to shareholder approval, the industrial turnaround specialist added.
"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.
Melrose shares were down 0.4% early Monday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.1% at 7,015.48
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Hang Seng: up 0.4% at 29,098.42
Nikkei 225: closed marginally higher, up 2.00 points at 29,685.37
DJIA: closed up 164.68 points, 0.5%, at 34,200.67
S&P 500: closed up 0.4% at 4,185.47
Nasdaq Composite: closed up 0.1% at 14,052.34
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EUR: down at USD1.1970 (USD1.1981)
GBP: up at USD1.3850 (USD1.3821)
USD: down at JPY108.55 (JPY108.82)
GOLD: firm at USD1,780.05 per ounce (USD1,778.24)
OIL (Brent): soft at USD66.60 a barrel (USD66.70)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
1000 CEST EU euro area balance of payments
1100 CEST EU construction output
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An increasing number of UK firms expect their prices to increase significantly in the coming months, new research suggests. The prediction comes amid growing concern among businesses over rising inflation, said the British Chambers of Commerce. Its survey of more than 5,800 firms found that two in five believe their prices will increase in the next three months. Around a third of respondents said inflation is a cause for concern. Raw materials costs were cited as the key driver of rising prices for manufacturers, with some firms pointing to continued post-Brexit and Covid-19 disruption, said the report.
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BROKER RATING CHANGES
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GOLDMAN SACHS RAISES IMI PLC TARGET TO 1520 (1500) PENCE - 'CONVICTION BUY LIST'
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LIBERUM RAISES PAGEGROUP PRICE TARGET TO 550 (460) PENCE - 'HOLD'
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CREDIT SUISSE RAISES ROBERT WALTERS PRICE TARGET TO 650 (530) PENCE - 'NEUTRAL'
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COMPANIES - FTSE 100
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Johnson Matthey said it has entered into a strategic partnership with Finnish Minerals Group for sustainable battery materials production. Johnson Matthey said the partnership will support development of a second commercial plant for eLNO cathode materials, which will be located in Finland and powered solely by renewable energy. Johnson Matthey aims to take market share in the growing electric vehicle battery market with its eLNO technology. The company says eLNO offers more energy density and uses less cobalt compared to traditional electric vehicle batteries amid a projected shortfall in cobalt supply. In addition, Johnson Matthey signed an agreement with SQM for supply of lithium hydroxide from SQM's Salar del Carmen plant in Antofagasta, Chile, and with Nornikel for nickel and cobalt supply from Finland and Russia.
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Flutter Entertainment has hired investment bank Moelis & Co to advise on the sale of Oddschecker, a betting odds comparison site, Sky News reported Friday afternoon. Citing "City sources", Sky said the business, which was set up in 1999 and has had several owners, could sell for about GBP150 million.
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COMPANIES - FTSE 250
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Aston Martin and Marshall Motor noted the death of Richard Parry-Jones in an accident on Friday near his home in Wales. Parry Jones had been chair of Marshall Motor since 2019 and joined the board of Aston Martin back in February.
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COMPANIES - MAIN MARKET AND AIM
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Siris Capital Group confirmed a press report from Sky News of a takeover offer for Equiniti Group at 170 pence per share. The offer is a 24% premium to Friday's closing price of 137.60p. Equiniti handles most of the FTSE 100's dividend payments. Over the weekend, Sky News reported that Siris may make a formal approach for a 170 pence per share bid this week, the same price as its most recent offer in January, citing banking sources. This would value the FTSE 250-listed firm at around GBP600 million.
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Cybersecurity firm Darktrace confirmed plans to list on the London Main Market in early May. Darktrace said it expects to be eligible for inclusion in FTSE indices. It is targeting a free float of at least 20% and will make up to 15% more shares available in an over-allotment option. The pricing for the initial public offering will be set in a book-build led by Jefferies, Berenberg and KKR Capital Markets. The company believes it can achieve a valuation of around GBP3 billion, Sky News reported earlier this month.
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COMPANIES - GLOBAL
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Two men were killed in a crash in Texas while riding in a Tesla car that police said almost certainly had no one behind the wheel, US media reported Sunday. The vehicle was driving at high speed late Saturday north of Houston when it slammed into a tree and burst into flames, the Wall Street Journal reported, quoting Harris County constable Mark Herman. "Our preliminary investigation is determining – but it's not complete yet – that there was no one at the wheel of that vehicle," he said. "We're almost 99.9% sure." When police arrived, one of the two victims was sitting in the front passenger seat and the other in the rear seat.
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Monday's Shareholder Meetings
MTI Wireless Edge Ltd - AGM
St James House PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
Robert Walters (RWA)
Melrose (MRO)
IMI (IMI)
PageGroup (PAGE)
Aston Martin Lagonda (AML)