Gardner Denver Inc., the industrial equipment maker, agreed to sell itself toKKR& Co. for about $3.7 billion after the buyout firm raised its offer.
Stockholders will receive $76 a share, the Wayne, Pennsylvania-based company said in a statement. That’s a 39 percent premium to the price on Oct. 24, the day before the company announced that it was exploring a sale.KKRlast month offered $75 a share, Bloomberg News reported Feb. 21.
“The long-term future of Gardner Denver is bright,” Pete Stavros, head ofKKR’s industrials team, said in the statement.
Vikram Kini, Gardner Denver’s vice president of investor relations, didn’t immediately return a phone call. The agreement was reported yesterday by the Wall Street Journal.
Gardner Denver said in October it was reviewing options including a sale after ValueAct Holdings LP, which disclosed in July that it had become the third-largest investor, pressed for a deal as “the most effective way to deliver maximum value to shareholders.” The sale toKKRcomes after rival SPX Corp. and private-equity firms Advent International Corp. and the team of Onex Corp. and TPG Capital walked away from takeover discussions, people familiar with the matter had said.
Gardner Denver makes compressors, pumps and other products for industries including manufacturing and energy exploration. Other suitors for the company included private-equity firms CCMP Capital Advisors LLC, Bain Capital LLC and Blackstone Group LP.
The merger is subject to approval by regulators and Gardner Denver shareholders. The company’s board recommends investor back the deal, which it expects to close in the third quarter.
The pump maker’s market has faced an influx of competitors amid a historic boom in natural gas production, and Gardner Denver has since focused on boosting margins through measures such as restructuring its European operations. The manufacturer estimated the cost cuts will result in annualized pretax savings of $35 million to $40 million by 2016.
Shares of Gardner Denver peaked at $91.50 on July 22, 2011. ValueAct held a 5.1 percent stake in the company as of Feb. 22, according to data compiled by Bloomberg.
Goldman Sachs Group Inc. acted as a financial adviser to Gardner Denver, with Skadden Arps Slate Meagher & Flom providing legal counsel. UBS AG and Simmons & Co. International gave financial advice toKKRand Simpson Thacher & Bartlett LLP provided legal guidance.