- US private equity group buys Ergotron
- Sale raises £520 million and finalises Nortek exit
- Focus now on ‘rest of the group’
Industrial conglomerate Melrose (MRO), which buys manufacturing firms in order to improve their performance, announced it had sold the Ergotron business for $650 million (£520 million).
The sale, to funds managed by The Sterling Group, completes the disposal of all the assets acquired in the Nortek acquisition back in 2016, more than doubling shareholders’ initial investment.
BUY AND MEND
Melrose’s modus operandi is to find ‘good businesses with strong fundamentals’ which it can improve through a mixture of investing its own funds and changing the management focus.
Once the firms have been transformed, Melrose then looks for a buyer and returns the proceeds to investors.
Ergotron designs, makes and sells ergonomic products for use in a variety of working, learning and healthcare environments and last year it made an adjusted operating profit of £58 million.
Melrose didn’t reveal the return it had made on Ergotron but on average it makes 2.5-times its investment on businesses it sells and has generated a 19% annual return on equity since its first acquisition.
The buyer, Sterling Group, is a US private equity investor with over $50 billion in assets and focuses on buying and building industrial companies.
ON A ROLL
‘The sale of Ergotron is the final step in our Nortek ownership cycle, capping what has been a very successful acquisition for Melrose shareholders,’ said chief executive Simon Peckham.
‘We will have more than doubled shareholders' equity investment in Nortek and have transformed the businesses themselves. Our attention now remains firmly on achieving the same result for the current group’, he added.
The rest of the group principally comprises the aerospace, automotive and metallurgy assets of GKN which were acquired in 2018.
Shares in Melrose jumped 4.5% to 139.5p, capping a month-long rally which has seen the company’s value climb more than a quarter.
LEARN MORE ABOUT MELROSE
