Manufacturing buy-out specialist Melrose Plc's (MRO.L) wholly-owned unit would acquire all outstanding American Depositary Shares or ADSs of German engineering firm Elster Group SE (ELT), for $20.50 per ADS cash and all shares for $82.00 per share in cash, representing an aggregate value for all outstanding ADSs and Shares of around $2.3 billion.
Elster was informed by its largest shareholder, Rembrandt Holdings S.A., that Rembrandt would tender the 17.41 million shares owned by it and the 531,025 ADSs owned by its wholly-owned subsidiary into the offer. The ADS offer price represents a 48.6 percent premium over the closing price on June 11, the last day prior to press speculation that Rembrandt was considering a sale of its Elster holding, and a 45.6 percent premium over the one month volume weighted average price per ADS as of the same date.
The transaction, which may close in the third quarter of 2012, would be funded by a fully underwritten rights issue by Melrose that is expected to raise some 1.2 billion pounds as well as by an acquisition tranche of 0.25 billion pounds under a new term and revolving credit facility of Melrose. Upon the completion of the tender offer, Elster's chief executive, Beresford-Wylie, and chief financial officer, Rainer Beaujean, plan to pursue other opportunities outside the company, while Melrose CFO Geoff Martin would become Elster's CFO.
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