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Rosebank Industries, the publicly traded company founded by the original team from turnaround expert Melrose, aims to raise approximately £1.14 billion to fund its first acquisition, a US manufacturer specializing in electrical distribution systems.
Founded by Simon Peckham and his colleagues from Melrose last year, Rosebank announced on Friday its intention to purchase Electrical Components International (ECI) for an enterprise value of under $1.9 billion. The acquisition will be financed through a mix of debt and a fully supported institutional capital raise at £3 per share.
This announcement follows Rosebank’s recent engagement with ECI’s owner, Cerberus Capital Management, regarding the potential acquisition, after initial discussions were mentioned back in February.
The former Melrose leaders aim to replicate their past successes in industrial turnarounds, which yielded substantial returns for both themselves and their investors, by implementing a strategy of “buy, improve, sell.” Peckham, who is the CEO of Rosebank, emphasized that this deal marks “the first step on the journey.”
“We are confident in our ability to help ECI unlock its full potential for the benefit of its employees, customers, and our shareholders,” he stated.
Peckham, along with fellow co-founder and executive vice-chair Christopher Miller, departed from Melrose in 2023 before launching Rosebank, which is backed by global investors like BlackRock, Norges, and GIC, and is traded on London’s junior stock exchange.
Last year, ECI generated revenues of $1.3 billion and primarily manufactures wire harnesses and controls for major blue-chip industrial clients.
Rosebank plans to double shareholder investments within a “three-to-five-year” timeframe through various “performance improvement measures.”
The goal is to boost ECI’s adjusted operating margin from around 13 percent to at least 18 percent, and its adjusted earnings margin to a minimum of 20 percent.
The company intends to maintain ECI’s strategy of acquiring “smaller, complementary, high-margin businesses . . . supported by ongoing cash flows.” The acquisition will be presented to shareholders at a meeting scheduled for July 1.
Melrose was established on Aim in 2003 with the aim of revitalizing underperforming industrial firms. It raised £13 million upon going public and subsequently secured over £10 billion in equity and £17 billion in debt to finance acquisitions.
Currently, Melrose is concentrating on the GKN aerospace division acquired during its controversial £8 billion takeover of the British company in 2018, and it spun off its automotive sector under the name Dowlais in 2023. Earlier this year, the automotive parts group agreed to be acquired by American Axle & Manufacturing in a cash-and-stock deal.
