Melrose Group (LON:MRO) has earmarked £2bn for shareholders after it agreed the disposal of its Elster smart metering business for £3.3bn to Honeywell.
Elster was acquired in 2012 for £1.8bn and is being sold for roughly 3 times current revenues. Honeywell is also picking up £0.9bn of pension liabilities and an accounting deficit of £134mln.
The sale will make it much smaller it said, but Melrose vowed not to change the "buy, improve, sell" business model or the size of the acquisitions it will look for.
“The search for the next acquisition continues and Melrose will, if anything, benefit from a greater level of flexibility for the next acquisition.”
Christopher Miller, Melrose’s chairman, said the sale was an excellent outcome and meant it had doubled shareholders’ money in three years.
“In the ten years since our first investment we have created well over £2bn of shareholder value. We look forward to beating that performance over the next decade."
In the half year to June, Elster performed strongly Melrose said with operating profits 22% higher. The electricity arm also did well, but profits dipped in water and engineer Brush saw revenues fall by 26% as the generator business was sluggish.
There is an interim dividend of 2.8p.