Nortek enters acquisition agreement with U.K.’s Melrose Industries
Nortek announced Wednesday it has signed an agreement with Melrose Industries PLC, a U.K. listed public company, and Nevada Corp., a newly created, wholly-owned subsidiary of Melrose, to be acquired by Melrose for US$86.00 per share in cash. The value of the deal is estimated at US$2.8 billion.
According to the terms of the agreement, Nevada Corp. will conduct an all-cash tender for 100 per cent of Nortek’s common stock. Subject to completion, Nevada will merge with Nortek resulting in Nortek becoming a a wholly-owned subsidiary of Melrose.
The agreement was unanimously approved by Nortek’s and Melrose’s boards of directors and the Nortek board intends to recommend that its stockholders tender their shares to Melrose. A shareholder’s meeting is expected to be held on July 25 in order to approve the merger. The agreement also includes a go-shop period through August 6, during which, subject to procedures outlined in the agreement, Nortek may enter into discussions and negotiations with third parties that submit an unsolicited proposal to acquire the company. Should Nortek accept a better proposal prior to 11:59 p.m. EST on Aug. 6, Nortek would be required to pay Melrose a termination fee of US$50 million.
According to its website, Melrose “buys good manufacturing businesses with strong fundamentals whose performance can be improved. Melrose finances its acquisitions using a low level of leverage, improves the businesses by a mixture of investment and changed management focus, sells them and returns the proceeds to shareholders.”
“We are very pleased to have reached the proposed agreement with Melrose Industries, which represents a significant premium for our shareholders,” said Nortek’s President and Chief Executive Officer Michael J. Clarke, in a statement. “We believe this partnership with Melrose will enhance Nortek’s ability to further leverage its industry-leading brands and market positions to continue driving profitable growth. We believe this transaction will be a positive for our employees and customers alike.”
“We have watched and admired Nortek’s progress and we are convinced we can steer this fine business to achieve its full potential,” said Melrose Chairman Christopher Miller. “We see a company full of hard-working, dedicated people who are really good at what they do. We can harness those strengths by meaningful long term investment and a vision based on our own experience in similar and relevant markets down the years. Melrose has been a highly successful custodian and builder of U.S. businesses and we are confident that we can bring that expertise to build Nortek for the long term.”
Barclays, Citi and RBC Capital Markets are acting as financial advisors and Weil, Gotshal & Manges LLP is acting as legal counsel to Nortek. Nomura International is acting as financial advisor and Simpson Thacher & Bartlett LLP is acting as legal counsel to Melrose.