Melrose Industries to Buy Nortek for $1.44 Billion

Shares of Nortek Inc. (NASDAQ: NTK) jumped up 39.65% to $87.27 on Wednesday morning after British buyout specialist Melrose Industries PLC announced acquisition for the company for $1.44 billion in cash. Nortek Inc. is a global diversified industrial company with leading brands and innovative air management and technology-driven products for for lifestyle improvement at home and at work.

Melrose offers takeover price of $86 per share which represents approximately 38% premium compared with the Tuesday close price. This offer gives Nortek an enterprise value of $2.81 billion which includes part of its debt and equity value.

“We are very pleased to have reached the proposed agreement with Melrose Industries, which represents a significant premium for our shareholders,” said Nortek’s President and Chief Executive Officer 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 believe this transaction will be a positive for our employees and customers alike.”

“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’s Chairman Christopher Miller. “We see a company full of hard-working, dedicated people who are really good at what they do. We can harness those strengths by meaningful long term investment and a vision based on our own experience in similar and relevant markets down the years. Melrose has been a highly successful custodian and builder of US businesses and we are confident that we can bring that expertise to build Nortek for the long term.”

Melrose has been in the market for new businesses after last year’s sale of Germany’s Elster Group GmbH, a supplier of gas-heating systems and meters, to Honeywell International Inc. (NYSE: HON) for $4.26 billion. In February, Melrose returned approximately £3.1 billion in cash to shareholders. The company also announced on Wednesday it will raise $2.35 billion by issuing 12 new Melrose shares around $1.26 each for every existing Melrose share to finance the acquisition.

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