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Melrose, which specialises in acquiring and turning around
underperforming businesses before selling them on, agreed to
sell Nortek in April and planned to use proceeds to pay down
debt, reduce a British pension deficit and return cash.
"We have taken a conservative view for the level of the current
return of capital, but if markets continue to recover, we expect
to announce a further significant return next year," CEO Simon
Peckham said.
Melrose's current return plans equal 15 pence per existing
ordinary share for shareholders, it said, adding that there were
some encouraging signs for its aerospace division after the
coronavirus pandemic hit it hard.
The division had squeezed out a modest profit in the first
quarter compared with a loss last year, helped by cost cuts.
London-listed Melrose, which has also warned growth would be hit
by a shortage of chips in the automotive supply chain, said the
group was trading in line with expectations ahead of interim
results on June 30.
Shares of the company were up 1.6% at 161 pence by 0717 GMT. The
stock lost nearly 26% of its value last year and is down 11% for
2021 as of Monday's close.
Melrose said there was recovery in demand for cars and powder
metals, and these divisions, including automotive, had been
"significantly" cash generative.
The owner of GKN, which supplies parts to carmakers such as
Volkswagen, also said last week it had disposed of another
business, Brush, for 100 million pounds. Brush provides
turbogenerators, transformers and related power services.
The capital return and share consolidation, through which the
return will be executed, would require approval from
shareholders, Melrose said.
($1 = 0.7194 pounds)
(Reporting by Pushkala Aripaka in Bengaluru; editing by Shounak
Dasgupta and Jason Neely)
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