Gardner Denver Inc. said it will continue to explore a possible sale or a merger after talks with SPX Corp. (SPW) were said to have terminated.
SPX, the Charlotte, North Carolina-based maker of pumps and valves, has ended takeover negotiations with industrial equipment maker Gardner Denver because its shareholders didn’t support the deal, said two people familiar with the matter.
The discussions collapsed in part because SPX couldn’t get the terms it wanted on a loan, said one of the people, who asked not to be named as the process is private. Gardner Denver is now getting back in touch with private-equity firms that expressed interest, according to that person.
Gardner Denver said in an e-mailed statement that it will continue to work with its adviser, Goldman Sachs Group Inc., to seek strategic alternatives and improve shareholder value.
“These alternatives could include, among others, enhancing the company’s existing strategic plan or a possible sale or merger,” the company said today.
Board members of Gardner Denver were also reluctant about the amount of SPX stock being offered, said a person familiar with the matter. Before today, SPX shares had tumbled 8.6 percent since Nov. 6, when Bloomberg News reported the company’s interest. The shares rose 1.1 percent to $65.79 at the close.
SPX investors are relieved that the deal fell through, said Nicholas Heymann, an analyst with William Blair & Co., in a telephone interview. Gardner Denver was too big for SPX to buy. Investors would prefer SPX to use proceeds of about $1 billion from the sale of its vehicle-servicing unit, which was completed this month, to repurchase shares, he said.
“It’s the idea of fishing for too big a fish in a dinghy,” Heymann said.
Jennifer Epstein, a spokeswoman for SPX, didn’t return telephone and e-mail messages.
Gardner Denver sank 11 percent to $67.40 after Reuters reported the collapse of the SPX talks. It’s the biggest drop since Aug. 8, 2011, and gives the company a market value of about $3.31 billion.
An eventual sale would mark a victory for activist investor ValueAct Capital Management LLC, owner of about 5.1 percent of Gardner Denver’s stock, according to data compiled by Bloomberg as of Sept. 30. The firm began lobbying for a sale in July after Gardner Denver Chief Executive Officer Barry Pennypacker resigned.
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