Manufacturing investor Melrose has all but completed a £1.5 billion takeover of a German engineering giant after completing the tender process.
The Alcester-based firm has received assurances for more than 99.6 per cent of gas, water and electricity meters manufacturer Elster through its Mintford subsidiary.
The deal, helped by one of the biggest rights issue in the UK this year, comes after Melrose lost out on a £1.5 billion bid to take over US engineering group Charter last year.
Melrose said it now expected Elster would be delisted from the New York Stock Exchange within the next few weeks.
“As previously announced by Melrose at the end of the initial offering period, having acquired over 95 per cent of the total share capital of Elster in the initial tender offer, Melrose intends to implement a ‘squeeze-out’ of the remaining Elster shareholders.
“Such squeeze-out process will be subject to German law and is expected to take a number of months to complete once initiated,” said the company in a statement.
Melrose said the acquisition represented a significant opportunity for it to execute its strategy of buy, improve, and sell.
The Alcester firm sold injection moulding business McKechnie Engineered Plastics in a £30.7 million deal earlier this month.
It is an engineering business that uses the principles of private equity groups to take control of manufacturing companies and improve profitability, with the aim of handing back hefty returns to shareholders.
It has been hunting for acquisitions after last year losing out to Colfax of the US in its effort to buy Charter.
Elster’s meters measure and control the supply of electricity, gas and water in 130 countries.
With revenues of £1.2 billion in 2011, the company is considered to have the potential to turn into a leading supplier of so-called “smart” meters that use computer intelligence to help consumers and industrial groups to save energy.
While based in Germany and listed on the New York Stock Exchange, Elster’s main shareholder until now has been CVC Capital Partners, a private equity group.
Under the offer each shareholder will receive $20.50, which is about 49 per cent above Elster’s share price on June 11, immediately before reports that Melrose was considering a bid for the company.
As part of the deal, Melrose, which has been advised by JPMorgan Cazenove, has agreed a new £1.5 billion debt package with banks. Some of the money replaces Melrose’s existing loans.