Melrose sells Dynacast in £360m deal

MANUFACTURING buyout firm Melrose said it agreed to sell its Dynacast business, which makes die-cast metal parts, for $590m (£360m) in cash to a company managed by private equity firm Kenner & Co.

Melrose, which looks to buy underperforming industrial businesses and sell them after restructuring, said in March it planned to sell Dynacast and that it would return the proceeds from the sale to its shareholders.

Melrose had bought Dynacast, whose products are used in the automotive, healthcare, consumer and telecom industries, along with McKechnie Aerospace in 2005 for £429m from private equity group Cinven.

In 2010, Dynacast posted a 32 per cent increase in revenue at £275.7m, accounting for about a fifth of Melrose’s total revenue.

Dynacast chief Simon Newman will remain with the firm, which will operate as an independent company.

Shares of Melrose closed at 335.70p on the London Stock Exchange, roughly one per cent down.

The stock has gained nearly a quarter of its value since news that Melrose planned to sell Dynacast first emerged in November.

MEET THE ADVISER

RAVI GUPTA
ROTHSCHILD

ROTHSCHILD managing director Ravi Gupta led the team that advised Melrose on the sale of its Dynacast business yesterday to a newly incorporated company, KDI Holdings, managed by Kenner & Company.

While at Rothschild, Gupta has also worked for Melrose in 2007 on the disposal of McKechnie Aerospace to JLL Partners for $855.6m (£523.5m).

In 2008 he was also part of the team who advised the Manitowoc Company’s acquisition of Enodis, creating a combined food service segment with annual revenues of nearly $2bn.

Among his more recent deals Gupta led the team that advised the Board of St Ives disposal of its magazine business to Walstead Newco3, a wholly owned subsidiary of Walstead Investments.

The price for the disposal was £20m, made up of £15m in cash payable on completion and £5m in loan notes.