3M (MMM) said that it agreed to acquire Scott Safety from Johnson Controls for a total enterprise value of $2.0 billion.
Scott Safety is a premier manufacturer of innovative products, including self-contained breathing apparatus or SCBA systems, gas and flame detection instruments, and other safety devices that complement 3M's personal safety portfolio.
Scott Safety's products help protect firefighters, industrial workers, police, military, homeland security forces, and rescue teams around the world from environmental hazards. The business had annual revenues in 2016 of approximately $570 million.
On a GAAP reported basis, 3M estimates the acquisition to be $0.10 dilutive to earnings in the first 12 months following completion of the transaction. Excluding purchase accounting adjustments and anticipated one-time expenses related to the transaction and integration, 3M estimates the acquisition to be $0.10 accretive to earnings over the same period.
The effective enterprise value multiple is approximately 11 times estimated annual adjusted EBITDA for the first 12 months following completion of the transaction, including expected run rate synergies.
The transaction is expected to close in the second half of 2017, subject to customary closing conditions, regulatory approvals, and information or consultation requirements with relevant works councils. 3M will finance the transaction through a combination of cash and debt.
Scott Safety employs about 1,500 people worldwide and is headquartered in Monroe, N.C.
Separately, Johnson Controls said it plans to offset dilution from the transaction, including increasing its share repurchase program during the remainder of fiscal 2017, and will provide additional details during the quarterly earnings call to be held in April.
Johnson Controls noted that it expects net cash proceeds from the transaction to be about $1.8 billion to $1.9 billion, and will be used to repay a portion of Tyco International Holding Sarl's $4.0 billion of merger related debt.
by RTT Staff Writer
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