British investment firm Rosebank Industries announced on Friday it will raise about £1.14 billion ($1.55 billion) to fund its purchase of U.S.-based Electrical Components International (ECI).
The acquisition deal is valued at under $1.9 billion and will be financed through a combination of debt facilities and a fully underwritten institutional capital raise priced at £3 per share.
Rosebank, which specializes in acquiring, improving, and eventually selling businesses, resumed talks to buy ECI earlier this week. The company aims to enhance ECI’s performance by targeting a 5 percentage point improvement in operating margin through cost savings and restructuring.
This would raise ECI’s adjusted operating margin to at least 18% and EBITDA margin to 20%.
The London-based firm plans to boost ECI’s cash generation by improving profits, optimizing working capital, and reducing leverage to between 2.5 and 3 times EBITDA. This strategy is expected to more than halve current debt service costs.
Rosebank’s CEO Simon Peckham expressed confidence in unlocking ECI’s full potential for the benefit of employees, customers, and shareholders.
The acquisition is subject to regulatory approval and shareholder consent, with a general meeting scheduled for July 1. Rosebank also intends to pursue further acquisitions following this deal as part of its “buy, improve, sell” model.
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