) announced last week that it has signed a definitive agreement
) to acquire the latter for $35.50 a share (aggregate value $1.25
billion) in an all cash transaction. Subject to regulatory terms
and conditions, the deal is expected to close during the fourth
quarter of 2013.
) is the exclusive financial advisor to Kaydon while
) will act as the exclusive financial advisor for AB SKF.
The deal is a win-win situation for the both the companies.
Through this acquisition, AB SKF, Sweden-based provider of
rolling bearings, seals, mechatronics, and lubrication systems,
will strengthen its position as a global industry leader. For
Kaydon, the deal is a strategic fit for its existing line of
business and it is expected to accelerate their growth
Further, the transaction also offers a boost shareholders
value. This all cash deal provides a 22% premium to Kaydon's
closing stock price on Sep 4, 2013 and a 21% premium to Kaydon's
30-day volume weighted avera
price. Further, the total enterprise value of $1.25 billion
reflects 12.7x Kaydon's LTM Adjusted EBITDA ($98 million as of
Jun 29, 2013).
Since the businesses complement well, the deal is expected to
create significant geographical and manufacturing synergies
enabling AB SKF to serve its customers and distributors better.
SKF expects to achieve major synergies over the next several
years with annual cost synergies of $30 million and $50 million
in sales synergies. Post acquisition, AB SKF will become a
knowledge engineering company as it strengthens its technology
segment and expands AB SKF's North American manufacturing
According to the agreement, AB SKF will begin a tender offer
on or after Sep 16, 2013 to purchase all of Kaydon's outstanding
shares. Further, under the terms of the agreement, Kaydon has the
right to request third parties regarding alternative acquisition
proposals till Oct 15, 2013, under the 40-day Go-shop Period
However, until Kaydon's board of directors makes a decision
regarding a superior potential proposal, Kaydon's management will
not disclose any matter pertaining to it. Further, it has also
been mentioned that there can be no assurance that this process
will result in a superior proposal. Kaydon will pay SKF customary
breakup fees with regard to the termination of the agreement in
case of any such superior proposal.
AB SKF is a leading global supplier of products, solutions and
services within rolling bearings, seals, mechatronics, services
and lubrication systems. Its services include technical support,
maintenance services, condition monitoring, asset efficiency
optimization, engineering consultancy and training.
Kaydon Corporation is a leading designer and manufacturer of
bearings and velocity control products such as industrial shock
absorbers, gas springs and vibration isolation products. Their
specialty products include filters and filtrations systems,
custom rings and seals as well as environmental services.
Both Kaydon and AB SKF have a Zacks Rank #2 (Buy).
BARCLAY PLC-ADR (BCS): Free Stock Analysis
KAYDON CORP (KDN): Free Stock Analysis Report
SKF AB (SKFRY): Get Free Report
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