KKR agrees to $3.9bn buyout(2)

Kohlberg Kravis Roberts has agreed to acquire industrial parts manufacturer Gardner Denver for $3.9 billion, the firm announced in a statement Friday. The firm will acquire all of Gardner Denver’s outstanding shares for $76 per share in cash, which represents a 39 percent premium on the firm’s 24 October share price.

Gardner Denver was trading at $74.74 per share on the New York Stock Exchange at market close Friday. 

The agreement is subject to shareholder approval and is expected to close in the third quarter of 2013, according to a statement. The company’s board of directors has approved KKR’s offer. Debt financing for the deal will be provided by UBS Securities, Barclays, Citigroup, Deutsche Bank Securities, RBC Capital Markets, Mizuho Corporate Bank and KKR Capital Markets. 

KKR had not responded to a request for comment at press time. 

Gardner Denver manufactures compressors, liquid ring pumps and blowers for the automotive, chemical, electric power and environmental industries, among others.  

In August, Gardner Denver announced it would undergo a restructuring initiative to “to optimise its global manufacturing footprint, reduce costs and expand margins”. 

The restructuring includes “workforce reductions and facility consolidations, and we recently announced new restructuring plans and future initiatives designed to improve profitability by reducing our global headcount and our manufacturing footprint in the European operations included in our Industrial Products Group,” according to a US Securities and Exchange Commission filing.  

Two months later, on 25 October, the company confirmed that it had begun to explore strategic alternatives, which included a possible sale or merger. 

The company’s revenues fell slightly from $2.371 billion to around $2.356 billion last year, according to a Q4 earnings release. In its SEC filing, Gardner Denver attributes the 1 percent decline to lower volume in both reportable segments and unfavorable changes in foreign currency exchange rates.

Earlier this month, KKR announced the sale of its majority stake in music company BMG to Bertelsmann, the German media conglomerate. A source with knowledge of the situation indicated that the sale will generate a return in the 1.5x – 2.0x range. The source also suggested the value of the transaction to be between €700 and €800 million.