22nd Jun 2021 08:57
(Alliance News) - Melrose Industries PLC unveiled a GBP730 million return to shareholders after completing the GBP2.62 billion disposal of its Nortek Air Management division to Chicago-based Madison Industries LLC.
The FTSE 100-listed industrial turnaround firm said it will return GBP730 million to its investors, equivalent to around 15 pence per share. Back in April, it said it would return a portion of the net proceeds of the disposal to shareholders.
Shares in Melrose were trading 2.4% higher at 162.20 pence in London early Tuesday, one of the top performers in the FTSE 100 index.
Melrose said it is taking a prudent stance on the proposed capital return given "these unprecedented circumstances", but added that, should encouraging sector recoveries continue, the board expects to be able to make another "significant" return to shareholders next year.
"We have taken a conservative view for the level of the current return of capital, but if markets continue to recover, we expect to announce a further significant return next year. For now, Melrose will proceed to return 15 pence per share to shareholders, in line with expectations. We believe Melrose is well positioned for the next stage of its journey," said Chief Executive Simon Peckham.
As well as the capital return, Melrose intends to use the sale proceeds to reduce net debt, and also confirmed plans mentioned in April to contribute around GBP100 million to the GKN Ltd UK defined-benefit pension schemes.
The company noted that the disposal proceeds, the GBP700 million of cash generated by Nortek under Melrose's ownership and the retention of the Ergotron and Nortek Control businesses means Melrose is "well placed" to double shareholders' investment on the Nortek acquisition.
Nortek Air produces custom and commercial air solutions and was acquired by Melrose in 2016 for an enterprise value of GBP2.15 billion.
In addition, Melrose noted trading so far in the first half ending June 30 has been in line with expectations.
The company added: "Both the Automotive and Powder Metallurgy Divisions have seen recovery in the automotive sector, albeit currently tempered by the impact of the global semi-conductor shortage. While it remains too early to state with certainty, there are also some encouraging signs for the Aerospace Division that the start of a recovery for that sector is in sight."
By Scarlett Butler; [email protected]
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