Teachers’ Private Capital, the direct investment arm of Ontario Teachers’ Pension Plan, has agreed to acquire wire rope manufacturer Bridon Limited from Melrose Industries.
The transaction values the UK-based business at £365 million and is expected to close by the end of the year.
Bridon, described by Melrose as a “global technology leader for demanding rope applications”, designs and manufactures wire rope, fibre rope, steel wire and strand for use in the oil and gas, mining, industrial, marine, and infrastructure sectors.
Melrose, which specialises in buying and overhauling specialist manufacturing businesses, acquired the Doncaster-headquartered Bridon in 2008 when it bought engineering group FKI, a FTSE 250 company, in a transaction that gave the group an enterprise value of more than £900 million.
According to Melrose’s 2013 full-year results, it sold five of the FKI businesses last year for a combined £950 million, more than tripling their value since acquisition.
For the year ending 31 December 2013, Bridon posted sales of £266.4 million, headline EBITDA of £41.6 million and headline operating profit of £34.1 million, according to Melrose.
“Bridon is an excellent example of the Melrose ‘buy, improve, sell’ model at work,” Melrose chief executive Simon Peckham said in a statement. “Since the acquisition of FKI in 2008, we have successfully grown and developed the Bridon business into a premier supplier of critical high-performance ropes for energy, mining and industrial applications.”
Melrose said it would use the proceeds from the sale of Bridon to pay down existing borrowings and to finance a potential return of capital to shareholders. As part of the transaction Melrose will contribute £6.7 million into the Bridon Group’s pension scheme.
The final FKI business retained by Melrose is Brush Turbogenerators, the world’s largest independent manufacturer of electricity generating equipment for the power generation, industrial, oil and gas, and offshore sectors. Melrose also owns Elster, a utilities meter business.
OTPP, with CA$140.8 billion (£78.12; $125.64 billion) in net assets under management as of 31 December 2013, is Canada’s largest single-profession pension plan. Its private equity arm manages a global portfolio valued at around CA$14.8 billion (£8.21 billion; $13.23 billion) and does lead and co-investments.
Melrose, which is listed on the London Stock Exchange, had a share price of 242.50 pence Monday morning, up 1.59 percent, giving the firm a market capitalisation of £2.6 billion. The company was advised on the deal by Rothschild and Nomura.