Melrose to Sell Dynacast for $590M

British buyout firm Melrose will sell Dynacast to a company managed by private equity firm Kenner & Co Inc., Reuters reported. Melrose bought Dynacast, which makes die-cast metal parts for the automotive and telecom industries, from buyout shop Cinven in 2005.

(Reuters) – British manufacturing buyout firm Melrose Plc said it agreed to sell its Dynacast business, which makes die-cast metal parts, for $590.0 million in cash to a company managed by private equity firm Kenner & Co Inc.

Melrose, which looks to buy underperforming industrial businesses and sell them after restructuring, said in March it planned to sell Dynacast and that it would return the proceeds from the sale to its shareholders.

Melrose had bought Dynacast, whose products are used in the automotive, healthcare, consumer and telecom industries, along with McKechnie Aerospace in 2005 for 429 million pounds from private equity group Cinven.

In 2010, Dynacast posted a 32 percent increase in revenue at 275.7 million pounds ($454.7 million), accounting for about a fifth of Melrose’ total revenue.

Dynacast CEO Simon Newman will remain with Dynacast and it will operate as an independent company.

“We remain confident in the outlook for Melrose particularly given the strong prospects of our Energy and Lifting divisions which have good exposure to high growth end-user markets such as energy and oil and gas,” Melrose Chairman Christopher Miller said in a statement.

Shares of Melrose closed at 338.9 pence on Friday on the London Stock Exchange, valuing the business at about 1.69 billion pounds.

The stock has gained nearly a quarter of its value since the company said in November that orders were increasing and the Daily Telegraph reported that Melrose planned to sell Dynacast. [ID:nSGE6AH09N]

($1 = 0.606 British Pounds)

(Reporting by Anne Pallivathuckal in Bangalore; Editing by Don Sebastian)