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Melrose bought the heating, ventilation and air conditioning unit in 2016 (Dominic Lipinski/PA)
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Melrose Industries will sell a majority of its Nortek arm to a US industrial group for £2.6 billion only five years after first buying the company.
Melrose said that it had struck a deal with Madison Industries over the heating, ventilation and air conditioning unit.
It sees Madison take over 73% of the Nortek business – measured by revenue – half a decade after Melrose bought the company for £2.2 billion.
Melrose Industries to sell Nortek air conditioning unit for £2.62bn
Melrose had initiated a sale process of Nortek in March after it was delayed by lockdown restrictions last year.
Melrose Industries said on Monday it has agreed to sell its Nortek Air Management business for £2.62bn and will distribute a portion of the funds to shareholders.
The British engineering firm said it plans to use part of the proceeds, which will come from Chicago-based buyer Madison Industries, to cut debt.
It added that the contribution will have reduced GKN’s pension deficit from around £1bn to £200m since acquiring it in 2018 for £8bn.
19 April 2021 | 07:06am
StockMarketWire.com - Engineering company Melrose Industries said it had agreed to sell its Nortek Air Management business to Chicago-based Madison Industries for around £2.62 billion ($3.625 billion).
Melrose Industries said a portion of the proceeds would be returned to shareholders, without specifying how much.
It also intended to use the proceeds to cut debt and contribute around £100 million to GKN s defined benefit pension schemes.
Completion of the deal, which was struck at a multiple of 12.5 times 2020 adjusted earnings, was expected in the second or third quarter of 2021 and was conditional on shareholder approval. The disposal demonstrates the strength of the Melrose strategy, chairman Justin Dowley said.
Turnaround specialist Melrose Industries has agreed to sell its Nortek air conditioning business for £2.6billion to a US company as it looks to raise cash after being hit hard by the Covid pandemic.
The group - which bought prestigious engineer GKN in 2018 and was recently criticised for closing down the GKN Birmingham car parts plant - said it has sold 73 per cent of the Nortek business to Madison Industries.
It will return a portion of the proceeds from the sale to shareholders, use £100million to reduce the deficit of the pension scheme of GKN UK and the rest will go towards paying down debts.