Exclusive: Gardner Denver explores sale - sources
NEW YORK (Reuters) - Industrial machinery maker Gardner Denver Inc GDI.N is exploring a sale and has drawn initial interest from several major private equity firms, according to people familiar with the matter, in a deal that would top $3.5 billion.
Gardner Denver's bankers at Goldman Sachs Group Inc (GS.N) have started to reach out to potential buyers in recent weeks and have asked for first-round bids by November 5, the people said on Thursday. The company may still decide not to sell after it completes the process, they added.
TPG Capital LP, Onex Corp (OCX.TO), KKR & Co LP (KKR.N), Blackstone Group LP (BX.N) and Bain Capital LLC are among the buyout firms considering offers, the people said. TPG and Onex are expected to bid jointly, two of the people added.
Gardner Denver, Goldman Sachs, Bain, TPG, Onex and KKR did not immediately respond to requests for comment. Blackstone declined to comment.
Shares of Gardner Denver surged to a six-month high on Thursday and closed up 20.5 percent at $66, representing a market value of about $3.2 billion. The company had long-term debt of some $400 million as of the end of June.
The move to solicit offers follows months of pressure from activist investor ValueAct Capital LLC, which has been calling for a sale of the company after acquiring a roughly 5 percent stake. ValueAct did not respond to a request for comment.
Gardner Denver, which makes compressors, pumps and vacuum products for industrial uses, hired Goldman Sachs initially as a defence adviser after ValueAct in July urged the company's board to pursue a sale.
The move followed the sudden resignation of Chief Executive Barry Pennypacker earlier that month and his interim replacement by Chief Financial Officer Michael Larsen.
"We believe that buyers are unlikely to pay nine times enterprise value to earnings before interest, tax depreciation and amortization (EBITDA) or more, with looming EBITDA declines in 2013, and at eight times to nine times our new estimate implies a $61-$69 stock," BB&T Capital Markets analysts wrote in a note last week.
"In our view, this is not likely enough to excite a board that saw the stock exceed $90 in summer 2011 and believes the company can unlock considerable value in the out years through restructuring and other initiatives," they added.
Gardner Denver has suffered as a result of its exposure, through its pumps business, to oil and gas prices.
Lower demand for petroleum and industrial pumps pressured the company's engineered products division, which reported a 36 percent drop in orders in the second quarter. The division accounts for 54 percent of Gardner Denver's total revenue.
In August it said it would shut some of its European manufacturing facilities and cut jobs as part of a restructuring plan aimed at cutting costs and expanding margins.
(Reporting by Greg Roumeliotis and Soyoung Kim in New York; Editing by Leslie Adler)
- Tweet this
- Share this
- Digg this
- With no sign of missing plane, search spreads far across land and sea |
- Malaysia military source says missing jet veered to west |
- Front companies, embassies mask North Korean weapons trade - U.N.
- Ukraine appeals to West as Crimea turns to Russia |
- Netanyahu, showing seized rockets, says Iran fooling the world