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Highlights

  • Acquisition marks Rosebank’s first major deal under its “Buy, Improve, Sell” industrial transformation model.

  • ECI to be acquired for under $1.9 billion, with plans to enhance margins and halve debt service costs.

  • Funded through £1.14 billion institutional capital raise and $900 million in new debt facilities.

Rosebank (LSE:ROSE) has announced a significant milestone with the planned acquisition of Electrical Components International (ECI), a US-based market leader in critical electrical distribution systems. This transaction, valued at less than $1.9 billion on a cash and debt-free basis, is being executed under Rosebank’s established “Buy, Improve, Sell” strategy and is the company’s first such deal since launching the model to drive shareholder value through industrial transformation.

ECI, which generates about $1.3 billion in revenues for 2024, primarily operates in North America, contributing roughly 80% of its sales. The company maintains market-leading positions in wire harnesses and control systems across high-demand sectors such as industrial automation, electrification, HVAC, and appliances, often servicing blue-chip clients. ECI currently operates at an adjusted operating margin of approximately 13%.

The acquisition is expected to be completed at an enterprise value representing approximately 9x projected 2025 Adjusted EBITDA (or 9.8x 2024 Pro forma Adjusted EBITDA), providing Rosebank with an opportunity to realise significant operational gains. Management has outlined plans to drive a 5 percentage point margin expansion, targeting an increase in adjusted operating margin to at least 18% and Adjusted EBITDA margin to 20%. 

ECI’s recent performance supports the investment thesis, with Adjusted EBITDA and adjusted operating margin rising by 2% in the first four months of 2025. The company has also successfully recovered all previously applied tariffs.

Rosebank plans to enhance ECI’s cash generation by focusing on profit improvement, working capital optimisation, and deleveraging to a 2.5x–3.0x EBITDA range, potentially cutting current debt service costs by over half. Management also stated its intent to double shareholder investment over a three- to five-year horizon through performance enhancement and strategic capital deployment.

In line with ECI’s established M&A track record, Rosebank aims to continue acquiring smaller, high-margin complementary businesses, targeting end markets with attractive growth dynamics. 

To finance the acquisition, Rosebank has launched a fully underwritten Institutional Capital Raise of approximately £1.14 billion, priced at £3.00 per share. This includes a UK and international institutional placing and a US private placement. Additionally, $900 million in New Debt Facilities has been secured, comprising a $400 million term loan and a $500 million revolving credit facility. Rosebank also plans to raise up to €8 million through an Open Offer.

The acquisition remains subject to customary regulatory approvals and shareholder approval at Rosebank’s general meeting scheduled for 1 July 2025.