Air management

Melrose in UK sells Nortek air handling unit for around $ 3.63 billion


  • Sell ​​Nortek Air Management to Madison Industries
  • Will use the proceeds to reduce debt, pension deficit, pay shareholders

April 19 (Reuters) – Melrose Industries (MRON.L) has agreed to sell its Nortek Air Management business for around 2.62 billion pounds ($ 3.63 billion) and plans to use the proceeds to pay off debt, reduce the UK pension deficit and return cash to shareholders.

The British engineer, who bought Nortek for £ 2.2 billion in 2016, said on Monday he expects the sale of the company to Chicago-based buyout specialist Madison Industries to be finalized in the second. or in the third quarter of this year.

London-listed Melrose shares gained 1.7% at the start of trading.

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Nortek, Melrose’s third largest division by revenue, manufactures heating, ventilation and air conditioning products for residential and commercial customers primarily in North America.

Melrose appointed strategic advisers in March last year to explore options for the temperature control business, but the process has been delayed due to lockdown restrictions.

Chairman Justin Dowley said in a statement that the Ergotron and Nortek Control activities, which are also part of the Nortek Group, remain under his ownership and will be “completed in due course”.

Melrose, who bought aircraft and auto parts supplier GKN for £ 8bn in 2018, said he planned to use some of the proceeds to contribute around £ 100m to the scheme. British pension fund GKN, reducing the funding gap to around £ 200million.

Melrose specializes in acquiring and turning around underperforming businesses before selling them on. He had approximately £ 2.85 billion in net debt at the end of last year.

The company did not specify how much money it would go to shareholders.

“We view the announcement as positive for shareholders for a number of reasons – crystallizing value, a now simplified and faster growing portfolio and further validation of the Melrose model,” JPMorgan analysts wrote in a note. .

($ 1 = 0.7217 pounds)

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Reporting by Yadarisa Shabong in Bengaluru, editing by Sherry Jacob-Phillips

Our Standards: Thomson Reuters Trust Principles.