Sell-offs will bring in £900m, says Melrose

INDUSTRIAL turnaround specialist Melrose Industries is reaping the rewards from a series of asset disposals which will net the firm around £900m.

In an interim management statement covering the period from July 1 until now, the Alcester firm said the disposal of four businesses will have delivered more than a tripling of shareholder value during the five years of Melrose’s ownership.

In October the firm announced it had signed a conditional agreement for the disposal of US assets Crosby and Acco to a company controlled by affiliates of private equity firm Kohlberg Kravis Roberts & Co (KKR) for £627.3m.

Today it said that deal is expected to complete shortly.

Amongst other disposals, in June it sold off its electric motor and generator manufacturer Marelli Motori for £181.4m to a company wholly owned by funds managed by the Carlyle Group.

In its statement to the London Stock Exhange today, Melrose said trading for this year is in line with expectations with Elster continuing to perform strongly and the remaining FKI businesses trading as planned.

“On completion of the sale of Crosby and Acco, the three Elster businesses will form two thirds of the revenue of the continuing group and the board remains confident it can achieve further improvement in each of their operating performances next year,” it said.

However, Melrose said it will have to spend £60m restructuring Elster, an energy metering business.
 
Following the sale of Crosby and Acco, Bridon will be the only trading company in Melrose’s lifting division.
 
Its medium term prospects remain good in its high end technical sales particularly in deep water offshore oil & gas, Melrose said.

“The new factory, in Newcastle upon Tyne, which opened this time last year is performing well and is expected to make a small profit this year. This factory will be a contributor to the expected improvement in Bridon’s performance over the next couple of years.”