ENGINEERING buyout specialist Melrose Industries yesterday announced the sale of Marelli Motori to private equity firm the Carlyle Group for €212m (£181.4m).
The FTSE 100-listed firm intends to use the proceeds from the sale of the electric motor manufacturer to pay off existing debt and for internal group purposes.
The deal value beat broker Investec’s estimate of £150m, who said that a sizeable return of cash is likely and that the sale “confirms Melrose’s ability to create value for shareholders in tangible form”.
“The disposal is in line with Melrose’s strategy as they had already told us they wanted to sell off a couple of businesses,” Jonathan Jackson, head of equities at Killik & Co, told City A.M.
“Their buying and selling strategy has been working really well. They improve the management, develop the assets and sell them off for a higher price. Unlike other industrial firms they have this self-help strategy of buying and selling which shields them against slumps in the economy.”
Melrose said earlier this month that it has entered into talks to sell lifting equipment manufacturer Crosby Group, with analysts valuing the sale at around £550m-£600m.
Marelli Motori recorded sales of €149.1m and earnings of €22.2m for the year ended 31 December 2012.
“Marelli Motori has performed very well during the period of our ownership since 2008, which is a credit to the hard work of its management team,” said Simon Peckham, chief executive of Melrose. “Following a period of investment and international expansion, Marelli Motori is now well placed for the next stage of its development under Carlyle’s ownership.”
Nomura advised Melrose on the transaction.
Melrose’s shares closed 2.5 per cent lower at 240.80p.