AIM-listed investment company Melrose is acquiring the Dynacast and McKechnie groups from Cinven for £429m. The total amount will be satisfied by the issue of 42 million consideration shares to the vendors, with the balance to be satisfied in cash. Melrose will fund the reverse takeover through a share placing which will raise around £200m, placing 200 million shares at 100 pence. Cinven is retaining 16% of the enlarged equity of the group.
Cinven led the £322m buyout of component manufacturer Dynacast from Coats Viyella in April 1999 and acquired aerospace parts company McKechnie in a £434m public-to-private in August 2000
N M Rothschild acted as financial advisor to Melrose and Robert W Baird and Morgan Stanley acted as financial advisor to Cinven. Investec acted as broker and nominated adviser to Melrose.
Richard Munton, partner of Cinven, said: “McKechnie and Dynacast have proved to be remarkably resilient businesses over five or so years of ownership. Trading has firmed based on solid fundamentals and the Melrose deal provides us with an exit through a hybrid reverse structure. We know the Melrose management team and they have a strong track record in running public companies. Now is the right time to undertake this transaction given the age of the investment, but Cinven has retained a significant stake in order to benefit from the upside we expect the improving aerospace market to deliver.”