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Met-Pro & CECO Merger Move a Step Closer - Analyst Blog
8/27/2013 9:30:00 AM
The Met-Pro Corporation ( MPR ) and CECO Environmental Corp. ( CECE ) merger moved a step ahead with the Met-Pro shareholders electing the form of merger consideration they wish to receive in the proposed merger transaction. The companies announced the preliminary results of the elections held by Met-Pro stakeholders to decide on the considerations.
On Aug 14, CECO Environmental had announced that it expects to close the proposed merger with Met-Pro Corporation between Aug 27 and 29. However, the closure will depend upon approvals by Met-Pro's and CECO's respective shareholders. The intention to acquire Met-Pro was previously announced on Apr 21, 2013.
Following the merger, Met-Pro will become a wholly-owned subsidiary of CECO. Met-Pro is a niche-oriented global provider of product recovery, pollution control, fluid handling and filtration solutions across multiple diversified end-markets.
According to the terms of the agreement, CECO will purchase all the outstanding shares of Met-Pro's common stock in cash and stock transaction. The total value of the deal is approximately $210 million, or $13.75 per share, reflecting a 43% premium to Met-Pro's share price as of Apr 19, 2013 (the closing date prior to the merger announcement).
In addition, the purchase includes $7.25 per share in cash and $6.50 per share in CECO common stock. Further, according to the terms of the agreement, Met-Pro's shareholders may opt to exchange each share of Met-Pro common stock for either $13.75 in cash and/or shares of CECO common stock having an equivalent value based on the volume weighted average trading price of CECO common stock for the 15-trading day period ending on the date immediately preceding the closing of the acquisition, subject to a collar. Overall elections are subject to proration so that roughly 53% of Met-Pro shares will be exchanged for cash and 47% for stock.
Coming back to Tuesday's meeting, about 67% of Met-Pro shareholders who hold approximately 9,808,910 Met-Pro shares decided to receive cash consideration while about 20% holding approximately 2,982,534 Met-Pro shares decided to receive stock consideration. However, about 13% of the shareholders did not give any consent about the consideration.
Since the decision to receive cash consideration was oversubscribed, it was decided that these shareholders will receive a combination of the cash and stock consideration as per the merger agreement. Those who decided to receive stock consideration or who did not make a valid election will receive all stock consideration.
In addition, it was also announced that anyone who bought Met-Pro share between Aug 26, 2013 and till the effective time of the merger, the investor will receive merger consideration consisting of all stock consideration in accordance with the proration procedures described in the merger agreement.
Further, if the transaction is closed as expected before Aug 30, 2013, then Met-Pro's quarterly dividend that was declared on Jun 5, 2013 to shareholders of record at the close of business on Aug 30, 2013 will not be paid to Met-Pro's shareholders.
Post acquisition, CECO will become a market leader in air pollution control, product recovery and fluid handling technology. The products and offerings of both the companies perfectly complement each other and provide a wider portfolio of services. After the acquisition, CECO expects to serve a customer base of more than 11,500 worldwide. The combined businesses will offer a broader set of products and services through a truly end-to-end pollution control technology solution in an environment where customers are increasingly demanding comprehensive solutions from fewer vendors and service providers.
Apart from this, the acquisition will benefit CECO with a well-balanced geographic portfolio of products and services in key emerging markets. The transaction is expected to be accretive to CECO's earnings per share, margins and cash flow. The combined company expects to generate revenues of about $300 million and $9 million in cost synergies once operational.
CECO Environmental currently has a Zacks Rank #3 (Buy). Some other companies operating in the same industry and worth considering at the moment are Progressive Waste Solutions Ltd. ( BIN ) and Pure Cycle Corporation ( PCYO ). Progressive Waste Solutions Ltd carries a Zacks Rank #1 (Strong Buy) while Pure Cycle Corporation has a Zacks Rank #2 (Buy).
PROGRESSV WASTE (BIN): Free Stock Analysis Report
CECO ENVIRNMNTL (CECE): Free Stock Analysis Report
MET-PRO CORP (MPR): Free Stock Analysis Report
PURE CYCLE CORP (PCYO): Free Stock Analysis Report
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