Melrose has sold McKechnie Aerospace and the bulk of PSM and, with the remainder of its business performing well, the group is hunting for a new turnaround opportunity and says it's optimistic about concluding at least one acquisition this year.
Although some analysts believe its improved indicative cash-and-paper offer of 85p a share for engineering group FKI - including a 3p special dividend - might still be on the light side, Melrose may just what the group needs. FKI is in need of some financial engineering, reflecting its large debt burden and poor US end markets. However, Melrose will have to conjure up a chunk of capital to foot the cash element of the £482m, bill as it's left with net cash of just over £30m, having returned £220m to shareholders in August. Together with dividends, Melrose has now returned to shareholders 95 per cent of the equity it raised when it was formed in 2003.