Melrose PLC to Acquire Elster Group SE

ESSEN, Germany, June 29, 2012 /PRNewswire/ -- Elster Group SE (NYSE: ELT) today announced that it has entered into a definitive agreement with Melrose PLC, pursuant to which a wholly-owned subsidiary of Melrose PLC would offer to acquire all outstanding American Depositary Shares of Elster (ADSs, each of which represents one-fourth of one ordinary share of Elster (Share)), for $20.50 per ADS in cash (the ADS Offer Price) and all Shares for $82.00 per Share in cash, representing an aggregate value for all outstanding ADSs and Shares of approximately $2.3 billion.

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The Administrative Board of Elster has unanimously approved the transaction. Elster has been informed by its largest shareholder, Rembrandt Holdings S.A., that Rembrandt has agreed to tender the 17,412,069 Shares owned by it and the 531,025 ADSs owned by its wholly-owned subsidiary (collectively representing approximately 62 percent of the outstanding share capital of Elster) into the offer. 

The ADS Offer Price represents a 48.6 percent premium over the closing price on June 11, the last day prior to press speculation that Rembrandt was considering a sale of its Elster holding, and a 45.6 percent premium over the one month volume weighted average price per ADS as of the same date.

The transaction will be funded by a fully underwritten rights issue by Melrose that is expected to raise approximately 1.2 billion pounds Sterling as well as by an acquisition tranche of 0.25 billion pounds under a new term and revolving credit facility of Melrose.

The closing of the tender offer is conditional, among other things, on holders of Shares and ADSs tendering at least 75 percent of the outstanding share capital of Elster, approval of the acquisition of Elster by the shareholders of Melrose at a general meeting, admission of the Melrose rights issue shares to the premium segment of the UK Financial Services Authority's Official List and to trading on the main market of the London Stock Exchange, and clearances by relevant regulatory authorities. The transaction is expected to close in the third quarter of 2012.

"This transaction will consolidate ownership of Elster and deliver value to current stakeholders," said Simon Beresford-Wylie, chief executive officer of Elster.

"Melrose has a proven track record of enhancing the value of the companies it acquires and is committed to supporting Elster's outstanding employees and management team in executing its plan to capitalize on the growth we see in the sector," Beresford-Wylie added. 

Following the closing of the tender offer, Elster expects to continue operating as an independent business with an Administrative Board that reflects the new ownership structure post completion of the tender offer and with Melrose chief executive Simon Peckham and current Elster chief legal officer Thomas Preute as managing directors. Following the closing of the tender offer, Beresford-Wylie and Elster chief financial officer (CFO) Rainer Beaujean plan to pursue other opportunities outside of the company, and Melrose CFO Geoff Martin will serve as CFO of Elster.

About Elster

Elster (NYSE: ELT) is one of the world's largest electricity, gas and water measurement and control providers. Its offerings include distribution monitoring and control, advanced smart metering, demand response, networking and software solutions, and numerous related communications and services – key components for enabling consumer choice, operational efficiency and conservation. Its products and solutions are widely used by utilities in the traditional and emerging Smart Grid markets. 

Elster has one of the most extensive installed revenue measurement bases in the world, with more than 200 million metering devices deployed over the course of the last 10 years. It sells its products and services in more than 130 countries across electricity, gas, water and multi-utility applications for residential, commercial and industrial, and transmission and distribution applications.

For more information about Elster, please visit www.elster.com.

Additional information

This announcement is neither an offer to purchase nor a solicitation of an offer to sell securities. The tender offer for the outstanding Elster Shares and ADSs described in this announcement (the Offer) has not commenced. At the time the Offer is commenced, Melrose and Mintford AG, an indirect wholly-owned subsidiary of Melrose, will file a Schedule TO Tender Offer Statement with the U.S. Securities and Exchange Commission (the SEC), and Elster will file a Schedule 14D-9 Solicitation/Recommendation Statement with respect to the Offer.

The Tender Offer Statement (including an offer to purchase, a related letter of transmittal and other offer documents) and the Solicitation/Recommendation Statement, as they may be amended from time to time, will contain important information that should be read carefully before any decision is made with respect to the Offer. Those materials and other documents filed by Melrose, Mintford AG or Elster with the SEC will be available at no charge on the SEC's web site at www.sec.gov.

The Schedule 14D-9 Solicitation/Recommendation Statement and related materials, when they are filed with the SEC, may be obtained for free by directing such requests to Elster, Attention: Investor Relations, 208 S. Rogers Lane, Raleigh, NC  27610, +1 919 250 5595. No securities of Melrose have been or will be registered under the U.S. Securities Act of 1933 and no securities of Melrose may be offered or sold in the United States absent registration or an exemption from registration thereunder. There will be no public offering of any securities of Melrose in the United States.

This release contains forward-looking statements that involve risks and uncertainties concerning the parties' ability to close the transaction and the expected closing date of the transaction, the anticipated benefits and synergies of the proposed transaction, anticipated future operations, products and services, and the anticipated structure of Elster, composition of its Administrative Board, and role of its key executives following the closing of the transaction. Actual events or results may differ materially from those described in this release due to a number of risks and uncertainties. These potential risks and uncertainties include, among others, the outcome of regulatory reviews of the proposed transaction, the ability of the parties to complete the transaction, the failure to retain key Elster employees, customer and partner uncertainty regarding the anticipated benefits of the transaction, the failure of Melrose and Elster to achieve anticipated goals of the proposed transaction and other risks detailed in Elster's SEC filings, including those discussed in Elster's annual report on Form 20-F for the year ended December 31, 2011 and Elster's report of results for the quarter ended March 31, 2012 furnished on Form 6-K, each of which is on file with the SEC and available at the SEC's website at www.sec.gov. Elster is not obligated to update these forward-looking statements to reflect events or circumstances after the date of this document. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

SOURCE Elster Group SE