Colfax to Acquire Victor, Offers Shares - Analyst Blog


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Within a week of releasing its fourth-quarter 2013 results, Maryland-based Colfax Corporation ( CFX ) made an announcement to acquire Irving Place Capital's Victor Technologies Holdings, Inc. This news was coupled with the company's announcement of public offering of common shares and BDT Capital Partners converting their preferred share holding into equity shares of Colfax. At the end of trading on Feb 12, shares of Colfax gained 1.6% over its previous day's closing price.

The acquisition agreement between Colfax and Irving Place Capital has been valued at $947.3 million, including assumption of debt. Victor Technologies Holdings is a renowned manufacturer of advanced cutting, gas control and specialty welding solutions.

Victor Technologies Holdings will compliment Colfax's ESAB business and will help its expansion in new markets and applications. Product brands associated with Victor Technologies Holdings include Victor, Tweco, Cigweld and Stoody. In addition to these popular brands, Victor Technologies' 2,000 associates and revenue generation capacity of $500 million will benefit Colfax.

Colfax's management anticipates the transaction to be accretive to adjusted earnings per share and free cash flow immediately. Completion is subject to customary closing conditions.

Concurrent with the acquisition news, Colfax entered into a conversion agreement with BDT CF Acquisition Vehicle, LLC. BDT investors hold the company's Series A Perpetual Convertible Preferred Stock. Per the terms of the agreement, BDT investors opted for conversion of roughly 13.9 million preferred shares into 12.2 million common shares of Colfax.

In lieu of the dividend Colfax would have paid on preferred shares to the investors through Jan 2015, it will pay $23.4 million to BDT investors.   

Also, Colfax offered to public roughly 6.5 million common shares. The underwriters have been given an option to purchase additional 0.975 million shares from Colfax. The proceeds from this offering together with cash and borrowings will be utilized to fund the Victor acquisition.

Colfax currently has a market capitalization of $6.6 billion and holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Altra Industrial Motion Corp. ( AIMC ), Barnes Group Inc. ( B ) and The Middleby Corporation ( MIDD ), all of which carry a Zacks Rank #2 (Buy).

ALTRA HOLDINGS (AIMC): Free Stock Analysis Report

BARNES GRP (B): Free Stock Analysis Report

COLFAX CORP (CFX): Free Stock Analysis Report

MIDDLEBY CORP (MIDD): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: AIMC , B , CFX , MIDD

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