Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

GKN-owner Melrose to return $1 billion to shareholders after Nortek sale

Published 06/22/2021, 02:43 AM
Updated 06/22/2021, 03:35 AM
© Reuters.

© Reuters.

By Pushkala Aripaka

(Reuters) -Britain's Melrose Industries on Tuesday laid out plans to return about 730 million pounds ($1.01 billion) in cash to its shareholders after the company sold its Nortek Air Management business, sending its shares 3% higher.

Melrose, which specialises in acquiring and turning around underperforming businesses before selling them on, agreed to sell Nortek in April and planned to use proceeds to pay down debt, reduce a British pension deficit and return cash.

"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," CEO Simon Peckham said.

Melrose's current return plans equal 15 pence per existing ordinary share for shareholders, it said, adding that there were some encouraging signs for its aerospace division after the coronavirus pandemic hit it hard.

The division had squeezed out a modest profit in the first quarter compared with a loss last year, helped by cost cuts.

London-listed Melrose, which has also warned growth would be hit by a shortage of chips in the automotive supply chain, said the group was trading in line with expectations ahead of interim results on June 30.

Shares of the company were up 1.6% at 161 pence by 0717 GMT. The stock lost nearly 26% of its value last year and is down 11% for 2021 as of Monday's close.

Melrose said there was recovery in demand for cars and powder metals, and these divisions, including automotive, had been "significantly" cash generative.

The owner of GKN (LON:GKN), which supplies parts to carmakers such as Volkswagen (DE:VOWG_p), also said last week it had disposed of another business, Brush, for 100 million pounds. Brush provides turbogenerators, transformers and related power services.

The capital return and share consolidation, through which the return will be executed, would require approval from shareholders, Melrose said.

($1 = 0.7194 pounds)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.