By Alex MacDonald
LONDON--Manufacturing group Melrose Industries PLC said Tuesday
it has agreed to sell its German-based energy and water business,
Elster Group GmbH, to Honeywell International Inc. for GBP3.3
billion ($5.1 billion) in cash.
Melrose intends to use the proceeds to return capital of over
GBP2 billion to shareholders and for general corporate purposes,
including paying down existing debt.
Elster Group, which comprises Elster Gas, Elster Electricity and
Elster Water, is a leading global provider of gas, electricity and
water meters and related communications, networking and software
solutions. Elster had gross assets of GBP2.5 billion as of the end
of last year and employs about 6,800 people in 39 countries,
including the U.S., Germany, the U.K., and Slovakia.
Melrose, which focuses on acquiring manufacturing businesses
that have the potential to be improved, said it has generated a 33%
internal rate of return within the three years since acquiring
Elster for GBP1.8 billion in August 2012.
The sale implies a multiple of 3.1 times Elster's 2014 revenue
of GBP1.05 billion and 14.3 times 2014 adjusted earnings before
interest, taxes, depreciation and amortization.
"I am pleased that we are able to deliver this return to
shareholders earlier than we had originally anticipated and have
every confidence that Elster will continue its success story under
the ownership of Honeywell," said Christopher Miller, Chairman of
Melrose.
Write to Alex MacDonald at alex.macdonald@wsj.com
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