Melrose to plug GKN pension with £100m after selling bulk of its air conditioning business for £2.6bn
Melrose will plough £100million into GKN’s pension scheme after the turnaround specialist sold the bulk of its air conditioning business for £2.6billion.
The payment will reduce the deficit at the engineering stalwart, which Melrose bought in a bitter £8.1billion hostile takeover in 2018, to £200million.
The pension scheme has around 32,000 members and was a contentious issue when Melrose was negotiating the deal.
Deficit: The GKN pension scheme has around 32,000 members and was a contentious issue when Melrose was negotiating the deal
Melrose eventually agreed to plug the gap, which was £1bn when the takeover was sealed, and has been paying it down ever since.
FTSE 100-listed Melrose said the sale of three quarters of its Nortek division to US group Madison Industries would also allow it to pay down some of its £2.85billion debt.
And it plans to hand back an estimated £500million to shareholders – or 10p per share.
Nortek makes temperature control kit such as air conditioning and ventilation sets.
Melrose operates similarly to a private equity companies – as it targets firms it thinks are under-performing and aims to shake them up and sell them for a profit. Its core strategy is ‘Buy, Improve, Sell’.