Melrose in £1.5bn move for German meter maker

By PERRY GOURLEY
Published on 30/06/2012 00:00

Melrose, the engineering turnaround group, yesterday announced it had reached agreement to buy German utility-meter maker Elster Group for $2.3 billion (£1.47bn) in its first major deal for four years.

Melrose, which targets underperforming manufacturing businesses, said Elster was an “excellent fit” with its acquisition strategy.

Chief executive Simon Peckham said Elster was a “high-quality business with strong end markets and the potential for significant development and improvement under Melrose management”.

Melrose has agreed to pay $20.50 for each Elster share, a 43 per cent premium to the average price in the past six months. The UK company said that the deal had the backing of around 64 per cent of Elster shareholders.

Elster, which makes meters for gas, electricity and water utilities, embarked on a cost-saving programme in the first quarter, including the closure of four major facilities and a consolidation of operations and sites.

Last year Melrose walked away from a potential deal to buy Charter International – parent company of Renfrew-based engineering group Howden – which was eventually bought by rival American suitor Colfax. Melrose’s last major acquisition was in 2008, when it bought crane, cable and hooks maker FKI for £478m.