16th Oct 2013 08:04
LONDON (Alliance News) - IMI PLC Wednesday said it would return GBP620 million to shareholders and top up its UK pension scheme after selling its beverage dispensing and merchandising business for USD1.1 billion, a sale that will leave it focused on its industrial flow control products.
The engineering group also said current trading was meeting its expectations and it is confident it will deliver full-year results that will meet current market expectations.
IMI said it sold its retail dispense business to The Marmon Group, a company owned by Warren Buffett's Berkshire Hathaway, for USD1.1 billion, or GBP690 million in cash. It expects the deal to complete in the first quarter of 2014.
Following completion, it intends to return GBP620 million to shareholders through a so-called "B and C share" scheme that allows investors to choose whether to receive the cash as an income and/or a capital payment. It will also continue an ongoing share buyback.
It intends to pay GBP70 million into its UK pension fund, which will reduce the scheme's deficit.
IMI has turned around the dispensing business over the past couple of years. It said an approach by Marmon for the business reflected that operating performance improvement and so it decided to accept so that it can focus on what it calls its "sweet spot" operations.
The beverage dispensing business produces the drinks dispensers used in fast food restaurants, pubs, convenience stores, hotels and offices around the world. It employs 2,250 people and had revenues of GBP313 million in 2012. The merchandising business provides displays for retailers and brand owners. It employs 850 and made revenues of GBP183 million last year. IMI's total revenues in 2012 were GBP2.19 billion.
The company brought forward a trading update due to the asset sale. It said revenues in the three months to end-September were up 4% on the year, or 3% excluding acquisitions and exchange rate movements. Revenues are flat so far this year, it added.
"Based on current market conditions, we remain confident that the group will deliver full year results in line with current market expectations," it said in a statement.
IMI shares were up 2.4% at 1,535 pence early Wednesday, the biggest increase on the FTSE 100.
By Steve McGrath; [email protected]; @SteveMcGrath1
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