Melrose completes Elster disposal to pave the way for £2.4bn shareholder return

WARWICKSHIRE turnaround specialist, Melrose Industries, has finally completed the £3.3bn disposal of its Elster business to Honeywell International, which will be accompanied with the return of approximately £2.4bn in cash to shareholders.

Court sanction of the return to shareholders was granted before Christmas and the share capital consolidation (SCC) process has begun.

The aim of the SCC is to ensure, so far as possible, the market price of an ordinary share remains approximately the same before and after the return of capital and to maintain comparability of historical and future per share data.
 
The £0.9bn balance of the net proceeds has been used largely to pay down existing borrowings at the Alcester-based group.
 
Christopher Miller, chairman of Melrose, said: “With this latest return of capital, Melrose will have given back to investors approximately £4.3bn in cash since our first acquisition in 2005, which is an outstanding outcome for shareholders and a further demonstration of the success of the Melrose ‘buy, improve, sell’ model.  

“We are optimistic that a suitable acquisition will be identified to bring additional shareholder value and we look forward to inviting investors to participate in this next project in due course.”
 
Following the return of capital, Melrose will have, since flotation on AIM in 2003:
·     raised approximately £2bn from shareholders
·     returned in cash approximately £4.3bn to shareholders
·     provided a total shareholder return of 502%, which compares to 14% for the FTSE
 350 index for the same period
·     created net shareholder value of approximate £2.8bn – including shareholders existing
 investment in Melrose
·     created in Melrose an investment vehicle with the track record and support to continue to implement its successful business model.

The SCC is expected to complete on February 10.