Elster Group SE has entered into a definitive agreement with Melrose PLC, by which a wholly-owned subsidiary of Melrose PLC will offer to acquire Elster’s shares for $82.00 per share in cash, value the business at approximately US$2.3 billion.
The administrative board of Elster has unanimously approved the transaction. Elster has been informed by its largest shareholder, Rembrandt Holdings S.A., that Rembrandt has agreed to tender into the offer more than 17 million shares owned by it and over 500,000 shares owned by its wholly-owned subsidiary .Together representing 62% of the outstanding share capital of Elster.
The Offer Price represents a 48.6% premium over the closing price prior to the sale. The transaction will be funded by a fully underwritten rights issue by Melrose that is expected to raise approximately 1.2 billion pounds sterling as well as by an acquisition tranche of 0.25 billion pounds under a new term and revolving credit facility of Melrose. The transaction is expected to close in the third quarter of 2012.
“This transaction will consolidate ownership of Elster and deliver value to current stakeholders,” said Simon Beresford-Wylie, chief executive officer of Elster.
“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.
Following the closing of the tender offer, Elster expects to continue operating as an independent business with an administrative board that reflects the new ownership structure post completion of the tender offer and with Melrose chief executive Simon Peckham and current Elster chief legal officer Thomas Preute as managing directors. Following the closing of the tender offer, Beresford-Wylie and Elster chief financial officer (CFO), Rainer Beaujean plan to pursue other opportunities outside of the company, and Melrose CFO Geoff Martin will serve as CFO of Elster.
