Melrose wholly owned subsidiary will acquire electricity, gas and water measurement and control provider Elster Group (ELT) for $2.3bn in an all cash deal, as per an agreement signed between ELT and Melrose.
Melrose’s subsidiary will acquire all outstanding American Depositary Shares of Elster for $20.50 per ADS in cash and all shares for $82 per Share in cash.
Rembrandt Holdings, Elster’s largest shareholder, has agreed to tender its 17,412,069 shares and the 531,025 ADSs owned by its wholly-owned subsidiary that collectively represents about 62% of the outstanding share capital of Elster into the offer.
Melrose will fund the transaction by a fully underwritten rights issue that is expected to raise approximately £1.2bn as well as by an acquisition tranche of 250m under a new term and revolving credit facility of the company.
Elster chief executive officer Simon Beresford-Wylie said this transaction will consolidate ownership of Elster and deliver value to current stakeholders.
"Melrose has a proven track record of enhancing the value of the companies it acquires and is committed to supporting Elster’s outstanding employees and management team in executing its plan to capitalize on the growth we see in the sector," Beresford-Wylie added.
The transaction is likely to be completed in the third quarter of 2012.
Following the transaction, Elster expects to continue operating as an independent business with an Administrative Board that will include Melrose chief executive Simon Peckham and current Elster chief legal officer Thomas Preute as managing directors.
Upon completion of the acquisition, Melrose CFO Geoff Martin will serve as CFO of Elster while Beresford-Wylie and Elster CFO Rainer Beaujean plan to pursue other opportunities outside.