Dynacast sell-off nets Melrose £370 million

Melrose, the industrial turnaround firm, today sold its die-casting business, Dynacast, to US private-equity firm Kenner & Co for £370 million.

"As a result of the improvement in its performance we have quadrupled our shareholders' investment in Dynacast within six years," said Melrose chairman Christopher Miller.

"Almost £1 billion of cash will have been generated from McKechnie and Dynacast which were acquired for £429 million in 2005. This is an excellent validation of... our strategy of operational improvement and value realisation."

New York-based Kenner & Co is paying $590 million (£360 million) cash and taking on $17.1 million of Dynacast's pension liabilities. Melrose will also hold on to any cash generated by Dynacast until the deal is completed, expected to take place in August. That could amount to another $30 million.

Melrose, which is run by former directors of the conglomerate Wassall, said it will return the cash proceeds to shareholders which analysts said would most likely be through a share buyback.

Miller said: "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 & gas. We are actively seeking an acquisition where we believe we can add substantial value."