KKR & Co. offered about $3.68 billion for Gardner Denver Inc. (GDI), the industrial equipment maker that’s courted takeover interest from at least eight firms since October, said a person familiar with the matter. The stock rose.
The New York-based buyout firm offered $75 a share, 11 percent higher than yesterday’s closing price, said the person, who asked not to be named as the process is private. Gardner Denver, which had hired Goldman Sachs Group Inc. (GS) to review options, won’t comment on the process, Chief Executive Officer Michael Larsen said today on a conference call about earnings.
A deal would mark a victory for investor ValueAct Holdings LP, which urged a sale after the July departure of former CEO Barry Pennypacker sparked an 8.6 percent share drop. After saying Oct. 25 that it was studying alternatives including a sale, Gardner Denver has seen talks collapse with rival SPX Corp. (SPW) and private-equity firms Onex Corp., TPG Capital and Advent International Corp.
“We actually felt as though the clock was sort of ticking on this acquisition,” William Bremer, a New York-based analyst at Maxim Group LLC who cut his rating on Gardner Denver shares to hold yesterday, said in a telephone interview. “That being said, we’ve got a fantastic company here that is definitely top tier in their space, not just in products but also distribution.”
The shares rose 5 percent to $70.84 at the close in New York. Gardner Denver has gained 3.4 percent this year, underperforming the 11 percent gain in the Standard & Poor’s 400 Industrials Index. (S4INDU)
Gardner Denver, based in Wayne, Pennsylvania, makes compressors, pumps and other products for industries including manufacturing and energy exploration.
ValueAct said today that it supports a sale of the company at the $75-a-share price KKR offered. The bid is 44 percent more than Gardner Denver’s close on July 26, the day the investor sent a letter to the company advocating a takeover as “the most effective way to deliver maximum value to shareholders.”
The KKR bid “should be considered a successful culmination of Gardner Denver’s sale process and a wonderful result for all shareholders,” Greg Spivy, a partner at ValueAct, said in a statement today.
ValueAct held a 5.1 percent stake in the company as of Dec. 31, according to data compiled by Bloomberg.
Earlier today, Gardner Denver reported fourth-quarter profit that beat analysts’ estimates. Excluding costs such as severance and expenses for the company’s review of strategic alternatives, Gardner Denver earned $1.49 a share, compared with the $1.34 average of analysts’ estimates compiled by Bloomberg.
CEO Larsen said that management wouldn’t field questions from analysts and investors about the exploration of strategic options during the conference call.
“We anticipate providing an update on the outcome when our board has determined a definitive course of action,” he said.
In addition to SPX, Onex, TPG and Advent, other suitors for Gardner Denver have included private-equity firms CCMP Capital Advisors LLC, Bain Capital LLC and Blackstone Group LP.
SPX planned to offer about $85 a share, though the discussions collapsed in part because SPX couldn’t get the terms it wanted on a loan. That compared with earlier ones from private-equity firms of about $73 to $75 a share, people familiar with the matter have said.
SPX walked away from takeover talks in December because its shareholders didn’t support the deal, people with knowledge of the situation said at the time. Gardner Denver then got back in touch with private-equity firms that had expressed interest and had sought bids for about $78 a share, people have said.
Two bidders walked away from the process because Gardner Denver was slow to assist them with due diligence, people with knowledge of the matter said this week. A joint offer by Onex and TPG and a separate proposal from Advent were withdrawn in part because the firms wanted more information and more time to study the company than management would allow, said one of the people.
It’s still possible that Gardner Denver could see more bids, although an offer higher than $78 a share is unlikely, Bremer of Maxim Group said.
“Having a company that is put on the block, that wants to be sold, you never know who is coming in late in the game,” he said. “There’s always some late horses to the race.”
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