) announced an increase in its common share offering to the
public from 6.5 million to 8 million. This, along with the Victor
acquisition news and BDT investors opting for preferred shares'
conversion into equity shares, drove the company's share price
higher. At the end of trading on Feb 13, shares of Colfax gained
7.2% over its previous day's closing price.
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Colfax has priced each of its common shares under the offering at
$68.75. Also, the underwriters have been given an option to
purchase an additional 1.2 million shares (up from 0.975 million
shares offered previously) from Colfax. The proceeds from this
offering, together with cash and borrowings, will be utilized to
fund the Victor acquisition.
The company, on Feb 12, made an announcement to acquire Irving
Place Capital's Victor Technologies Holdings, Inc. 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 complement 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 a revenue generation capacity of $500 million will benefit
Colfax's management anticipates the transaction to be accretive
to its adjusted earnings per share and free cash flow
immediately. Completion is subject to customary closing
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.
In the last 7 days, the Zacks Consensus Estimate has remained
stable at $2.61 for 2014, while beincreasing 2.6% to $3.13 for
2015. These estimate represents year-over-year growth of 27.9%
for 2014 and 19.8% for 2015.
Colfax currently has a market capitalization of $7.1 billion and
holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the
Altra Industrial Motion Corp.
Barnes Group Inc.
The Middleby Corporation
), all of which carry a Zacks Rank #2 (Buy).