Nortek Inc. (NASDAQ: NTK) is watching its shares make a handy gain on Wednesday after news of an acquisition. The company announced that it has signed an agreement and plan of merger with Melrose Industries, a U.K.-listed public company and Nevada Corp., a newly created wholly owned subsidiary of Melrose, to be acquired by Melrose for $86.00 per share in cash.
The total enterprise value is estimated at roughly $2.8 billion. The price represents a premium of 38% to Nortek’s closing price on July 5, and a premium of 80.4% to the volume weighted average price over the prior six month period.
Under the terms of the agreement, Melrose will commence the offer as soon as practicable and expects it to be no later than July 11. Any shares of Nortek common stock not tendered in the offer will be acquired by Melrose in the merger and the holders thereof will be entitled to receive the purchase price.
The transactions are expected to close by the end of August 2016. Although the agreement is still subject to shareholder and regulatory approvals.
Michael Clarke, president and CEO of Nortek, commented:
We are very pleased to have reached the proposed agreement with Melrose Industries, which represents a significant premium for our shareholders. 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.
Christopher Miller, Melrose’s chairman, added:
We have watched and admired Nortek’s progress and we are convinced we can steer this fine business to achieve its full potential. 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.
Shares of Nortek were last trading up nearly 39% at $86.58, with a consensus analyst price target of $61.00 and a 52-week trading range of $33.85 to $92.96.
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