Melrose confirms £1.2bn acquisition talks with German firm
WARWICKSHIRE-based manufacturing turnaround specialist Melrose has confirmed it is in talks to buy a German firm which makes gas, water and electricity meters. No figure has been placed on the deal but sources have estimated it to be worth £1.27bn.
In a statement, the Alcester firm said: “Further to recent press speculation, Melrose confirms that it is in discussions with the board of Elster Group regarding a recommended cash offer for the entire issued share capital of Elster.”
Elster, listed on the New York Stock Exchange, is said to have agreed to due diligence, which is on-going.
However, Melrose has indicated it will not proceed with the transaction without a recommendation from the board of Elster and a “hard irrevocable undertaking” from Elster’s largest shareholder, Rembrandt Holdings, which is owned by funds advised by CVC Capital Partners.
Reports suggested Melrose might be willing to pay $20.50-a-share for Elster, valuing it at $2.3bn, but the company is thought to want $22-a-share.
Elster, based in the German town of Essen, would be Melrose’s first acquisition after its failed attempt last year to buy gas and welding group Charter International. The Warwickshire lost out in a bidding war to S-based Colfax Corporation.
Melrose said any offer for Elster would be funded through a combination of new debt and a fully underwritten rights issue to existing Melrose shareholders.
“The board of Melrose will only proceed with the transaction if it meets Melrose’s acquisition criteria, including the terms on which financing for the transaction can be raised. This will include, but not be limited to, the Melrose share price at the time of announcement,” it added in its statement.
Elster, which as a market capitalisation of $1.9bn, is a world leading engineering company and one of the world’s largest providers of gas, electricity and water meters, gas utilisation products and related communications, networking and software solutions.
It generated revenues of $1,869m in 2011 from providing products and solutions for use in residential, commercial and industrial end markets, as well as transmission and distribution applications, and has one of the most extensively installed meter bases in the world.
Elster’s products and solutions measure and control the supply of electricity and gas and water in traditional and ”Smart Grid” markets in 130 countries, and in total Elster has deployed more than 200m meters over the course of the last decade.
