Invensys hits £1.5bn disposals target

Invensys will tell the Stock Exchange this morning that it has met its target of raising £1.5bn from disposals after sealing the £568m sale of its Rexnord industrial components business.

It reached agreement on Saturday to sell Rexnord to Carlyle Group, a US private equity firm. Invensys will have to write off $860m (£555m) in goodwill as a result of the deal.

Investors are likely to welcome the transaction, which follows years of negative newsflow and a series of disastrous profit warnings. Rick Haythornthwaite, appointed in February to replace Allen Yurko as chief executive, committed the company to realise £1.5bn from divestments by March 2003.

Rexnord, based in Wisconsin, had sales last year of $724m, producing an operating profit of $104m. It employs 5,000 people in 30 factories around the world.

The Rexnord agreement means that six of the eight businesses put on the block in February have gone. Debt at Invensys has been brought down by some £1bn to £2bn under Mr Haythornthwaite, who shot to prominence in leading Blue Circle's defence to a hostile bid from Lafarge but then later selling the cement company to its French suitor for a higher price.

Invensys will now hope that Moody's will upgrade its debt rating, which was knocked down to junk status in February.

Mr Haythornthwaite said: "We are delighted at the speed with which we have reached this target, and will continue to focus on completing the remaining disposals. The remaining businesses, Invensys Drives and Fasco Motors, have total sales over £350m and the disposals are in progress and in line with timetable."

It is thought that Drives and Fasco will make less than the value of their annual revenues, providing around £200m further to Invensys. Following the completion of the divestment programme, Invensys will be focused on its energy management and production management businesses.