Crane Co. to Acquire MEI Conlux Holdings; Reaffirms 2012 EPS Guidance; Sets
Preliminary Guidance for 2013
STAMFORD, Conn. -- December 21, 2012
Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered
industrial products, announced today that it has signed an agreement to
purchase 100% of the equity interests in MEI Conlux Holdings (U.S.), Inc. and
its affiliate MEI Conlux Holdings (Japan), Inc. (together “MEI”) from Bain
Capital and Advantage Partners. The purchase price is approximately $820
million on a cash free and debt free basis, representing 9.6 times MEI’s
estimated 2012 EBITDA of $85 million. MEI, a leading provider of payment
solutions for unattended transaction systems, serves customers in the
transportation, gaming, retail, service payment and vending markets.
Headquartered in Malvern, PA, and with sales of approximately $400 million in
2012, MEI has customers in over 100 countries and employs 820 people
worldwide. From 2009 to 2012, MEI sales have grown at a 13% compound annual
growth rate and EBITDA margins have increased to 21%. On a pro forma basis,
the combined sales of MEI and Crane Payment Solutions will be approximately
$575 million in 2012.
Mr. Eric Fast, President and Chief Executive Officer of Crane Co., said, “This
acquisition is consistent with our strategy of niche market leadership. MEI is
an outstanding business and a leader in the payment solutions industry, with a
solid product portfolio, excellent technology and sophisticated hardware and
software. MEI materially strengthens our existing Payment Solutions business,
which we have grown through three acquisitions beginning in 2006. Together we
will be able to offer our customers a complete product suite utilizing MEI’s
leadership in bill validation and Crane’s leadership in coin handling. We will
have the global scale to capitalize on key growth opportunities, especially in
emerging markets. In addition, we will expand our capabilities to drive
innovation and facilitate the integration of bills, coins and cashless payment
options to better serve customers worldwide. Excluding inventory step-up and
one-time transaction costs, we expect MEI to be accretive to earnings within
the first year of acquisition by approximately $.25 per share, including $.05
in synergies. We expect synergies to grow to $25 million annually on a pre-tax
basis, or $.30 per share in 2015.”
The purchase of MEI is contingent upon regulatory approvals and customary
closing conditions. Crane Co. said that it intends to finance the acquisition
through a combination of cash on hand and additional debt. Commitments are in
place to cover 100% of the financing needs in order to facilitate the closing
of the transaction, which is expected to be in the second quarter of 2013.
Crane’s Payment Solutions business has annual sales of $175 million with
operating profit margins of approximately 14%. Crane acquired NRI, a niche
European coin validation and dispensing business, in 1985 as part of the
acquisition of UniDynamics Corporation. In recent years Crane has invested
over $220 million to grow and broaden the payment solutions portion of its
Merchandising Systems business segment. Cash Code, which specializes in niche
applications for bill validation and dispensing devices, and Telequip, which
provides coin dispensing equipment, were both acquired in 2006, substantially
expanding the capabilities of NRI’s coin handling business. Money Controls,
acquired in late 2010, produces a broad range of payment solutions for coins
and bills, and further broadened the scope and scale of the business.
Until the completion of this acquisition, MEI and Crane Payment Solutions will
operate independently under their existing management structures. Following
the acquisition, it is anticipated that Michael Hayes, President of MEI, will
become president of the combined payment solutions businesses, headquartered
in Malvern, PA. Mr. Hayes will report to Max Mitchell, Executive Vice
President and COO of Crane. Kurt Gallo, President of Crane Payment Solutions,
will assume the Chief Operating Officer role of the combined businesses,
reporting to Mr. Hayes. Kiyoaki Takeda will continue as President of MEI
Conlux Holdings (Japan). Brad Ellis, President of Crane’s Vending Solutions
business will continue to report directly to Max Mitchell.
2012 EPS and Free Cash Flow Guidance Reaffirmed
The Company continues to expect 2012 EPS to be in the lower half of the
previously communicated guidance range of $3.75 - $3.85, excluding Special
Items. The EPS guidance includes $0.04 associated with the first half profits
from discontinued operations, but excludes the following Special Items: the
gain from the previously announced sale of two businesses ($0.33 per share)
and repositioning costs ($0.26 per share). The 2012 EPS guidance also assumes
a $0.05 per share benefit associated with a potential retroactive application
of the Research and Development tax credit still under consideration in
Congress. Full year 2012 free cash flow (cash provided by operating activities
less capital spending) remains in a range of $150 - $180 million.
Preliminary 2013 Guidance
The Company’s preliminary outlook for 2013 includes core sales growth
(excluding acquisition and foreign exchange impacts) of between 2% and 4%, and
earnings per share in a range of $4.05 to $4.20. 2013 EPS guidance also
assumes the restoration of the R&D tax credit ($0.05 per share). Preliminary
2013 guidance does not include potential impacts from the pending acquisition
Conference Call Information
Crane Co. will hold a conference call on Friday, December 21, at 8 a.m.
Eastern time to provide further details about the transaction. Please refer to
the Company’s website www.craneco.com to access the call and accompanying
presentation slides, which will be posted on Thursday evening, December 20th.
About MEI Conlux Holdings
MEI was founded by Mars in 1969 in response to the demand for better coin
recognition technology for vending machines. In 2003, MEI acquired Conlux, the
Japanese leader in coin mechanisms and bill validators. MEI was acquired by
Advantage Partners and Bain Capital in 2006. For additional information,
please refer to www.meigroup.com.
About Crane Co.
Crane Co. is a diversified manufacturer of highly engineered industrial
products. Founded in 1855, Crane provides products and solutions to customers
in the aerospace, electronics, hydrocarbon processing, petrochemical,
chemical, power generation, automated merchandising, transportation and other
markets. The Company has five business segments: Aerospace & Electronics,
Fluid Handling, Engineered Materials, Merchandising Systems, and Controls.
Crane has approximately 11,000 employees in North America, South America,
Europe, Asia and Australia. Crane Co. is traded on the New York Stock Exchange
(NYSE:CR). For more information, visit www.craneco.com.
This press release may contain forward-looking statements as defined by the
Private Securities Litigation Reform Act of 1995. These statements present
management’s expectations, beliefs, plans and objectives regarding future
financial performance, and assumptions or judgments concerning such
performance. Any discussions contained in this press release, except to the
extent that they contain historical facts, are forward-looking and accordingly
involve estimates, assumptions, judgments and uncertainties. There are a
number of factors that could cause actual results or outcomes to differ
materially from those addressed in the forward-looking statements. Such
factors are detailed in the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2011 and subsequent reports filed with the
Securities and Exchange Commission.
Richard E. Koch, 203-363-7352
Director, Investor Relations and Corporate Communications
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