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UK-based Melrose Industries ready to buy again after Elster Group turnaround

(Credit: Melrose Industries Plc) Image shows a screenshot capture of the website of Melrose Industries Plc.Melrose Industries Plc
March 5
8:53 AM 2014

Melrose Industries Plc Chairman Christopher Miller said that the UK-based investment firm is in the position of making its next acquisition after it had made metering provider Elster Group SE more profitable, Bloomberg reported.

After Melrose divested five of firms in 2013, the operation of Elster, a gas, water and electricity metering firm, now comprises two-thirds of the group's revenue. The sale of five of its FKI companies, which included lifting-gear equipment manufacturers Crosby and Acco, was made for $1.58 billion. Crosby and Acco was bought by private equity giant Kohlberg Kravis Roberts & Co after Melrose had backed it for five years, the report said.

In a statement, Miller said, "We are ready and keen to buy again but we remain patient for the right opportunity." According to its Chief Financial Officer Geoff Martin, Melrose will be setting its sights on a US or European-based manufacturing engineering business that has an international scope which it can acquire in the range of £1 billion to £3 billion, the report said.

In a telephone interview with Blomberg, Martin said, "We know what we're looking for and we have an eye on a number of opportunities," Martin said. "When we spot the right opportunity we'll move ahead."

London-based Melrose said its operating income rose to £274.9 million last year which represented a 20% increase. In its first year that it became the full owner of Elster, the metering provider's profits increased by over one-third. While currency concerns this year might hinder growth, Melrose is confident that its profits will still improve in the medium-term, the report said.

Germany-based Elster posted an increase of 3.3 percentage points to 17.4% in its operating margins largely due to its water business. The company, however, added that it will be facing a challenge in bringing back it two energy businesses Bridon and Bush to profitability because demand for mining ropes and generators have declined in the short-term, the report said. 

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