Melrose to buy Nortek for 2.8bn dollars

Melrose Industries

UK company Melrose Industries has agreed to buy U.S. manufacturer Nortek for $2.81 billion. Nortek is home to a range of pro-AV brands including Gefen, Elan, SpeakerCraft, Niles, Panamax, Furman, and Xantech.

Melrose has a history of buying manufacturers, cutting costs and re-selling quickly, the company's motto is 'buy, improve, sell'. Melrose said its focus would be to improve the Nortek business.

Negotiations with Nortek began off in March. Earlier in the year Nortek was the subject of rumours regarding a possible takeover by United Technologies. 

Nortek made 90% of its 2015 revenue in North America. Nortek has products in 80% of U.S. homes, and has said it expects 2016 sales to grow.

The offer price of $86 per Nortek Share values the issued and outstanding shares of Nortek at $1.436 billion (£1.1bn) with an enterprise value of $2.810 billion (£2.1bn). The offer price represents a premium of approximately 37.6% to the closing price of a Nortek Share on July 5, 2016 and approximately 81.3% to the average price of a Nortek Share in the six month period ending on July 5, 2016.

Melrose was founded in 2003 with a £13 million listing on AIM, the London Stock Exchange’s international market for smaller companies.