Melrose shares rise as group unveils £500m buyback plan


Melrose Industries unveils fresh £500m share buyback programme amid sale of Ergotron to US buyer

  • Melrose shares up over 8% as group launches £500m share buyback plan 
  • The group’s share buyback programme will start on 9 June 

Melrose Industries shares jumped on Wednesday after the group unveiled the start of a £500million buyback programme. 

It follows Monday’s announcement that Melrose will sell its Ergotron business to US-based private equity outfit The Sterling Group for £520million. 

Melrose boss Simon Peckham told investors on Wednesday that the Ergotron sale puts the manufacturing firm in a position to distribute capital to shareholders and it has ‘chosen the quickest way to start to achieve that goal’. 

In charge: The boss of Melrose, Simon Peckham

He added: ‘We will continue to keep under review the appropriate capital structure of Melrose as we position for continuing success.’

Melrose shares have risen sharply, and were up 8.76 per cent or 12.45p to 154.55p in mid-morning trading, having fallen over 15 per cent in the past year.  

The group’s share buyback programme will start on 9 June and will end no later than 31 October 2022.  

It is intended to reduce Melrose’s share capital, with all purchased ordinary shares set for cancellation. 

Back in March, Melrose said it would leave the timing of a capital return ‘under review’ amid Russia’s invasion of Ukraine. 

It had previously planned to announce a ‘second capital return’ in its annual results published in March. 

Prior to this, in June 2021, Melrose launched a £730million return to shareholders after completing the disposal of its Nortek Air Management division to Chicago, Illinois-based Madison Industries. 

In its latest annual results, Melrose announced a final dividend of 1p per share, up by one third on the previous year, giving a full year dividend of 1.75p a share.

In its March results, Justin Dowley, chairman of Melrose, said: ‘We have realised gains for shareholders by doubling the value of Nortek and significantly outperforming all Group cash generation targets, which has de-risked the route to value realisation from GKN. 

‘We have transformed the GKN businesses to increase their full potential including investing in sustainable technology and properly funding their pension schemes. With the benefits of significant restructuring increasingly coming through, combined with the strong cash generation, Melrose is positioned to create, and realise, significant value for shareholders.’

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