Melrose Industries PLC · LSE:MRO

Melrose Industries — Merger or Acquisition (February 2018)

13 slides from Melrose Industries's merger presentation, Feb 1, 2018

  1. Slide 1: Trading update and GKN

    Melrose Industries PLC Trading update and GKN 1 February 2018

  2. Slide 2: Disclaimer

    Disclaimer IMPORTANT: YOU MUST READ THE FOLLOWING BEFORE CONTINUING. THIS PRESENTATION CONTAINS INSIDE INFORMATION. NOT FOR RELEASE, PRESENTATION, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM THE UNITED STATE OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION O

  3. Slide 3: Exceptional Nortek improvement in a very short time

    Exceptional Nortek improvement in a very short time Nortek underlying operating profit growth  Trading in 2017 was in line with management expectations  Nortek trading transformed more comprehensively and faster than envisaged at the time of the acquisition c. +50% c. +65% ‒ underlying operating p

  4. Slide 4: An outstanding 2017 for Nortek – there is more to go for

    An outstanding 2017 for Nortek – there is more to go for  Management freed from restrictions of formerly centralised group structure  Improvement programmes funded by planned investment of c2x depreciation  Strong cash conversion rate of over 100%1 Global HVAC Air Quality and Home Solutions  Str

  5. Slide 5: Brush restructuring for new market conditions

    Brush restructuring for new market conditions  Previously announced structural market changes caused by global environmental policy  Fall in gas turbine market volumes of >60% from 2011 peak  Brush’s turbogenerator sales fallen from 122 units in 2016 to c.50 expected in 2018  Entered into a cons

  6. Slide 6: Summary of our Offer

    Summary of our Offer1 81p in cash 418.3p and 1.49 New Melrose Shares per GKN Share  Premium of c. 28% to GKN’s share price pre approach GKN shareholders will:  receive immediate cash payment of £1.4bn Share price movement since  own c. 57% of the merged group announcement has already created  be

  7. Slide 7: Our plans to unlock GKN's potential – re-energise and re-purpose

    Our plans to unlock GKN’s potential – re-energise and re-purpose We will unlock potential for the benefit of all stakeholders by delivering operational improvements, empowering management and investing heavily Simplify management structure  Flat organisation with fast economic decision-making Exit

  8. Slide 8: Our plans to unlock GKN's potential – simplify and declutter

    Our plans to unlock GKN’s potential – simplify and declutter Exit certain smaller non-core businesses in the Aerospace and Automotive divisions, once improved Exit Powder Metallurgy in the medium term, once improved Net proceeds returned to shareholders, taking into account interests of all stakehol

  9. Slide 9: Melrose invests in its businesses

    Melrose invests in its businesses  McKechnie/Dynacast 1.0x R&D investment of over £230m (c. 4% of sales) at Elster and Nortek over the last 5 years  FKI 1.4x Capital expenditure under our ownership1  Elster 1.3x On average we invest an additional third of the original equity purchase price in ord

  10. Slide 10: Melrose are good stewards of pension schemes

    Melrose are good stewards of pension schemes  Good stewards of pension schemes, with focus on:  Maintaining professional relationships with trustees  Implementing on-going deficit reduction programmes  Maintaining prudent levels of leverage  Opportunistically de-risking liabilities Substantial,

  11. Slide 11: Summary

    Summary  GKN board have accepted that fundamental change is needed  Ultimately a choice of incumbent management team or Melrose team with decades of experience turning around businesses  Change of control is a necessary first step to unlocking GKN’s potential  Melrose management team are substan

  12. Slide 12: Appendix

    r *- Appendix

  13. Slide 13: Melrose delivers for shareholders

    Melrose delivers for shareholders Total shareholder investment £ billion Total money invested (3.64) Generated net shareholder Total money returned to investors 4.35 value of £4.9bn Net shareholder investment returned 0.71 Market capitalisation1 4.22 Net shareholder gain 4.93 £17.7  McKechnie/Dynac

Melrose Industries — Merger or Acquisition (February 2018) on 6ix