Engineering turnaround specialist Melrose Industries yesterday announced that it planned a 13-for-14 reverse stock split, more than two months after it sold a division that makes ropes used in mines.
The company said it would return £200m, or about 18.7p per share, to shareholders from the proceeds of the £365m sale of its Bridon business, with the rest being used to repay debt.
Melrose, which follows a buy-improve-sell strategy akin to private equity firms, completed the sale of its Bridon division to the Ontario Teachers’ Pension Plan in November.
“Realising value in our businesses and returning all or part of this value to shareholders is a fundamental part of the Melrose buy, improve, sell strategy,” said chairman Christopher Miller.
Shareholders will be able to choose how they get the payout.
Under an income option, they’ll receive one C share for each existing share and a dividend of 18.7p per C share.
Under a capital option, they’ll receive one B share for each existing share, which will then be redeemed by Melrose on 2 March for 18.7p per B share.