LONDON - Honeywell International said Tuesday that it had agreed to acquire Elster, which manufactures water and gas meters and control devices, from Melrose Industries for 3.3 billion pounds ($5.1 billion) in cash.
The deal came three years after Elster was acquired by Melrose of Britain for about $2.3 billion.
The deal sets the stage for new acquisitions by Honeywell, said David M. Cote, Honeywell chairman and chief executive.
"Elster has outstanding technologies, brands, energy efficiency know-how and global presence, all of which we are very well positioned to build on," he said in a statement.
The transaction is subject to regulatory and shareholder approval, and it is expected to close in the first quarter.
Melrose, which buys manufacturing companies and tries to turn them around for later sale in a strategy similar to that of private equity firms, said that it intended to return more than 2 billion pounds from the sale of Elster to shareholders and that it would use the remaining proceeds for general corporate purposes, including paying down debt.
"The disposal of Elster represents an excellent outcome for Melrose shareholders and another milestone in our track record," Christopher Miller, the Melrose chairman, said. "Through investing heavily and improving operational performance, we have created substantial value for shareholders, more than doubling their money in three years," he said.
Elster, based in Mainz-Kastel, Germany, manufactures thermal gas equipment for the commercial, industrial and residential heating and gas industry. It also manufactures gas, water and electricity meters, including smart meters. It employs about 6,800 people in Britain, Germany, Slovakia and the U.S. and posted revenue of 1.05 billion pounds in 2014.
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