Melrose to land £200 million share windfall


20 Mar, 2017

Melrose to land £200 million share windfall

Melrose Industries revealed that it expected to return around £200 million ($312.5m) to shareholders next year, days after it sold a division that makes ropes used in mines.

Melrose, which has a buy-improve-sell strategy similar to private equity firms, finalised the sale of its Bridon sector last week to the Ontario Teachers' Pension Plan for 365 million pounds. The company bought Bridon for about 150 million pounds back in 2008, with this sale being the only one Melrose has committed to so far.

The company sold five units for a total of 945 million pounds in the year ended June and returned about 600 million pounds in cash to shareholders in the form of a dividend or a capital return. Melrose also announced a reverse stock split of 11 for 13.

Melrose’s board is expected to recommend early next year a return of capital to shareholders using the same model, the company said on Wednesday. Analysts have been anticipating Melrose to sell part of its Elster portfolio, namely the water, gas and power consumption meter businesses it bought in 2012 for 1.8 billion pounds.

The company told Reuters in July that Elster Water could be the first to be sold off from their portfolio, but Finance Director Geoff Martin said on Wednesday Melrose was not ready to part with the section yet.

"(The huge margin improvement at Elster Water) naturally means that sooner rather than later, we may be ready to sell it, but not yet because we want these results to continue for a while longer," Martin told Reuters. "Maybe next year sometime, but no promises."

Melrose shares were down 0.7% at 260p on the LSE (London Stock Exchange) at 1010 GMT.

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