Recently, private-equity firm
Kohlberg Kravis Roberts & Co.
) announced its plan to acquire Pennsylvania-based industrial
Gardner Denver Inc.
) for $3.74 billion. Kohlberg Kravis will pay $76 for each of the
outstanding shares of Gardner Denver, which is at a 39% premium
to this industrial machinery maker's closing price on Oct 24,
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The agreement is subject to approvals from the shareholders as
well as regulatory bodies and is anticipated to close in the
third quarter of 2013. Kohlberg Kravis triumphed over major
private equity firms like
The Blackstone Group LP
The Goldman Sachs Group, Inc.
) acted as Gardner Denver's banker for the deal, whereas UBS AG,
along with Simmons & Company International, advised Kohlberg
Kravis. Subsidiaries of UBS, Barclays, Citigroup, Deutsche Bank,
Royal Bank of Canada and Mizuho Financial Group offered debt
financing commitments to Kohlberg Kravis.
The acquisition will be immensely beneficial to Kohlberg Kravis,
as Gardner Denver boasts of a 100-year old expertise in
industrial goods manufacturing as well as technical innovation.
For Kohlberg Kravis, it is the third deal in the industrial
sector. Earlier, in 2011, it agreed to acquire Capsugel - a
division of pharmaceutical major Pfizer Inc. Later that year,
another deal was inked with Capital Safety - a supplier of safety
gear for construction and other workers.
According to Kohlberg Kravis, the deal is a part of its focus on
diverse revenue sources through the introduction of inventive
We believe the company's broad diversification strategy positions
it comfortably to benefit from enhanced global investment flows.
However, the unstable U.S. dollar, volatile equity markets and a
sluggish economic recovery, along with mounting competition, make
Kohlberg Kravis currently carries a Zacks Rank #3 (Hold) whereas
Gardner Denver carries a Zacks Rank #2 (Buy).