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Melrose sells ventilation business Nortek for £2.6bn

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August Graham, PA City Reporter
·2-min read
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Melrose Industries will sell a majority of its Nortek arm to a US industrial group for £2.6 billion only five years after first buying the company.

Melrose said that it had struck a deal with Madison Industries over the heating, ventilation and air conditioning unit.

It sees Madison take over 73% of the Nortek business – measured by revenue – half a decade after Melrose bought the company for £2.2 billion.

Melrose will keep the Ergotron and Nortek Control parts of the business.

The company will use proceeds from the sale to pay down its debt, and reduce the deficit of the pension scheme of GKN UK, another subsidiary.

The £100 million payment will reduce GKN’s pension deficit to just £200 million, down from £1 billion in 2018 when Melrose bought the engineering giant.

Some of the money will also be paid out to Melrose shareholders, the board promised.

“We bought Nortek, an underperforming group, which we felt had outstanding potential in 2016 for £2.2 billion,” said chairman Justin Dowley.

“The businesses being sold today for £2.62 billion (3.625 billion dollars) represent 73%, by revenue, of the Nortek group and the returns are excellent.”

After buying Nortek in 2016 Melrose removed a layer of central management, letting operational and executive teams transform the business, it said on Monday.

“Our strategy of ‘Buy, Improve, Sell’ remains the same but circumstances evolve,” said chief executive Simon Peckham.

“Our businesses are all responding to the demands of climate change, driven by customers and consumers; Air Management’s StatePoint Technology is a perfect example of this.

“On our watch, our Air Management executive team has created a business from scratch with exemplary environmental credentials which will make a real difference to energy and water consumption in its market. We can now hand that technology to a high quality buyer with specialist aspirations and skills.”