Industrial equipment maker Gardner Denver, Inc. (GDI) has agreed to be acquired by private equity giant Kohlberg Kravis Roberts & Co. L.P. (KKR) for about $3.9 billion, including the assumption of debt, the two companies said Friday.
The deal comes more than four months after Gardner Denver confirmed that its board was exploring strategic alternatives, including a sale, to enhance shareholder value.
Under the terms of the deal, KKR will acquire all of the outstanding shares of Gardner Denver common stock for $76 per share in cash.
The offer price represents a 39 percent premium to Gardner Denver's share price on October 24, 2012, the day before the company confirmed its plan to explore strategic alternatives. It also represents a 3 percent premium to Gardner Denver's closing stock price of $73.85 on Thursday.
Bloomberg reported in early January 2013 that Wayne, Pennsylvania-based Gardner Denver attracted renewed interest from private equity firms KKR and Advent International Corp. after the company ended merger talks with diversified machinery company SPX Corp. (SPW).
New York-based KKR's offer also came after two other suitors for Gardner Denver reportedly walked away from the bidding process as the company was said to be slow in assisting them with due diligence. A joint offer by Onex Corp. and TPG Capital and a separate offer from Advent International Corp. were reportedly withdrawn, partly due to lack of cooperation on part of Gardner Denver's management.
It was reported last month that KKR offered to acquire the industrial equipment maker for $75 per share, with that proposed deal valuing the company at about $3.68 billion. The offer price was later raised as Gardner Denver reportedly sought a higher price.
Gardner Denver's board of directors have unanimously approved the merger agreement and recommended that the company's shareholders vote in favor of the transaction, which is currently expected to close in the third quarter of 2013.
Michael Larsen, Gardner Denver's President and Chief Executive Officer said, "In addition to the significant value to our shareholders, Gardner Denver will benefit from KKR's track record of execution as the Company continues to pursue its strategy focused on driving organic growth, particularly in underserved markets, and building new revenue streams in the aftermarket and through the introduction of innovative customer-centric solutions across its businesses."
The transaction is being made through KKR's investment funds. The deal would be the third for KKR in as many years in the industrials space. The buyout firm agreed to buy Capsugel, a unit of drugmaker Pfizer Inc. (PFE), in April 2011. Later in the same year, KKR agreed to acquire Capital Safety Inc., a provider of safety products and equipment for construction and other workers.
In Friday's regular session, GDI is trading at $74.70, up $0.85 or 1.15 percent on a volume of 3.92 million shares.
KKR is trading at $18.92, up $0.12 or 0.64 percent on a volume of 64,658 shares.
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