Melrose Industries shareholders face a sizeable payout after the industrial conglomerate agreed to sell its US air conditioning system for $ 3.65 billion (£ 2.6 billion).

The FTSE 100 group announced Monday it would sell 73 percent of Nortek Air Management to privately held Chicago-based Madison Industries in a cash deal.

Melrose will use the proceeds from the sale to reduce its current net debt of approximately £ 2.85 billion, add £ 100 million to the pension fund of its aerospace and auto parts division, GKN, and provide a payout to shareholders.

Melrose said a decision has yet to be made on how much of the proceeds will be returned to shareholders, but analysts at home broker JPMorgan Cazenove estimated they could expect a payout of about 10p a share, or £ 500 million.

Simon Peckham, CEO of Melrose, said the sale was further confirmation of the company’s modus operandi, “buy, improve and sell.”

“Making money is not a bad thing. . . Our job is to take underperforming companies and make them better, ”he said.

The group has historically generated significant returns for executives and shareholders by focusing on buying, restructuring, and reselling underperforming manufacturing companies.

Melrose removed key management roles and invested in new products at Nortek to improve profitability.

In early 2020, consideration was given to selling the business, but sales were delayed due to the coronavirus pandemic. Melrose will continue to own Ergotron, a designer of ergonomic products, and Nortek Control, an automation and home security company.

The sale will be Melrose’s largest deal since the controversial acquisition of GKN in 2018 for £ 8 billion. The £ 100 million injection into GKN’s pension will bring the funding deficit down to around £ 200 million.

Melrose shares traded 3 percent lower at 174.02 pence in the early afternoon. They were trading nearly 245 pence per share before last year’s pandemic hit and impacted Melrose’s key automotive and aerospace industries.

Peckham said Monday the company is seeing some recovery in the automotive sector, although progress is being delayed by the global shortage of computer chips. He reiterated that the company is not expecting any recovery in the aerospace sector this year, but predicted that when it does, “the market will come back strongly”.

The company is investing heavily in energy-efficient solutions, including new technologies for storing hydrogen. Melrose had invested approximately $ 75 million in Nortek’s StatePoint business to fund the development of proprietary technology to protect servers in large data centers from overheating.

Peckham said the group will return to consider acquisitions after the Nortek sale closes, adding that aerospace “would be a good place to put capital”.