Atlas Copco AB (ATCOA) agreed to buy Edwards Group Ltd. (EVAC) for $1.2 billion in cash to expand in vacuum pumps for semiconductor production and further broaden a client base beyond the construction and mining industry.
Shareholders of the British company will receive as much as $10.50 a share depending on this year’s financial results, Stockholm-based Atlas Copco said in a statement today. The offer price, starting at a minimum of $9.25 per share, is at least 11 percent more than Edwards’ average value over the past 30 days of trading, it said.
The purchase is Atlas Copco’s biggest for 14 years, and it follows six other takeovers this year, including Shandong Rock Drilling Tools Co. Edwards taps a $6 billion vacuum-pump market with an offering of smaller-scale units used in semiconductor production and flat panels.
“It is a great fit,” said Atlas Chief Executive Officer Ronnie Leten in the statement. “The vacuum solutions market is growing and has similar characteristics to our existing industrial businesses.”
Edwards Group, based in Crawley, had sales of about $1 billion last year, of which more than half was in Asia, and has 3,200 employees. Atlas Copco acquired Rental Service Corporation for $1.61 billion in 1999. Atlas Copco, with a market value of 217 billion kronor ($33 billion), makes products from air compressors to rock drills and assembly systems for industrial equipment.
U.K. Hunting Ground
A bid would be the latest for a U.K. manufacturer from a larger European competitor. Schneider Electric SA (SU) of France last month agreed to buy Invensys Plc (ISYS) to gain control systems used by chemicals makers and oil refineries. Trelleborg AB agreed in April to purchase Ambler Technologies Ltd., a maker of composite materials located near Manchester, England.
Edwards’ vacuum products and abatement systems create controlled, low-pressure, particle-free environments needed by makers of semiconductors as well as solar-energy equipment. Its shares closed at $8.45 on the Nasdaq Stock Market on Aug. 16. The ADR’s traded at the equivalent of $11.33 in Germany as of 10:42 a.m. local time.
Edwards’ two largest shareholders are CCMP Capital Advisors LLC, the former private-equity unit of JPMorgan Chase & Co. (JPM), and Unitas Capital Pte, an Asian buyout firm, which hold equal stakes of more than 42 percent each, according to data compiled by Bloomberg. The board of Edwards unanimously recommends the offer, which will be financed using existing funds with closing in the first quarter of 2014.
Including debt of $400 million, Atlas Copco is paying about 6.42 times earnings before interest, taxes, depreciation and amortization. Industrial deals in the U.K. have attracted multiples of 8.69 times earnings, according to data compiled by Bloomberg.
Barclays and Lazard acted as financial advisers to Edwards on the transaction. Legal advisers to Edwards are Davis Polk & Wardwell London LLP, Weil Gotshal & Manges LLP and Maples & Calder.