Nortek agrees to be bought by Melrose Industries for $2.8B

PROVIDENCE-based Nortek has agreed to be acquired by British industrial conglomerate Melrose Industries for roughly $2.8 billion.
PROVIDENCE-based Nortek has agreed to be acquired by British industrial conglomerate Melrose Industries for roughly $2.8 billion.

(Updated, 5:15 p.m.)
PROVIDENCE – Nortek Inc., maker of commercial and residential air circulation and technology products for home and office, has agreed to be acquired by Melrose Industries PLC for $86 per share, which translates into a rough enterprise value of about $2.8 billion. According to a press release from Nortek, the purchase price represents a premium of about 38 percent on its July 5 closing price on the Nasdaq equity market.
The deal, which was unanimously approved by both the Nortek and Melrose boards of directors, involves an all-cash purchase of Nortek shares by a newly formed Melrose subsidiary, Nevada Corp. The deal is set to begin July 11 and close by Aug. 31.
Terms of the agreement allow Nortek to shop for another offer through Aug. 6, but if Nortek does take another offer, it would be required to pay Melrose $50 million.
“We are very pleased to have reached the proposed agreement with Melrose Industries, which represents a significant premium for our shareholders,” said Nortek President and CEO Michael J. Clarke. “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 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. … 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.”
Melrose is a United Kingdom-based owner of a portfolio of industrial manufacturing enterprises, with a history of buying and investing in companies.

Reached Wednesday afternoon, Nortek Vice President, Strategy and Investor Relations Michael Botelho said, “Melrose does not have a significant presence in North America and does not operate in our markets. The process to close the transaction will take about eight weeks. At this point, it is too premature to tell what, if anything, will be done with the Nortek corporate office and employees after the transaction closes.”

Nortek reported net income for its first quarter of $2.6 million, an improvement on a $13.9 million loss in the same 2015 period. Sales for the three months registered a 7.2 percent increase to $613.9 million.
According to Bloomberg News, Nortek was in talks to be acquired by United Technologies Corp. last summer. Earlier this year United Technologies rebuffed efforts by Honeywell to buy the Farmington, Conn.-based industrial conglomerate.

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