KKR Agrees to Buy Gardner Denver for $3.7 Billion

Posted by on Mar 10th, 2013

KKR & Co., a private equity company run by Henry Kravis and George Roberts, agreed to purchase industrial equipment manufacturer Gardner Denver for around $3.7 billion after it increased its offer. KKR will pay $76 per share for the Pennsylvania-based company according to the statement released by the two parties. Gardner

The amount is a 39 percent premium to the price on October 24, which is the day before the company announced the possibility of a sale. Last month, KKR offered $75 per share. Pete Stavros, head of KKR’s industrials team, said that they see a bright future for Gardner Denver. The deal is expected to close in the third quarter with a value of $3.9 billion that includes the assumption of Gardner Denver’s debt.

Gardner Denver previously stated that it was reviewing options including a sale in October after ValueAct Holdings LP, which is the company’s third largest investor, called for a deal as the most effective way to give shareholders maximum value of their investment.

The sale to KKR came after its rival SPX Corp. and private equity companies Advent International Corp. and the group consisting of Onex Corp. and TPG Capital didn’t pursue their takeover plans. Stocks of Gardner Denver increased 1.2 percent to $74.74. The company manufactures pumps, compressors, and other products for industries including energy exploration and manufacturing. Other companies who showed their interest in Gardner Denver were private equity firms CCMP Capital Advisors LLC, Blackstone Group LP and Bain Capital LLC.

KKR shares went up 1.2 percent to $19.03. The stock has increased 25 percent in 2013 as it outpaced the 8.8 percent increase in the Standard & Poor’s 500 index.

The deal is still subject to approval from China’s commerce ministry, US and European antitrust regulators, and South Africa’s competition commission. The company is also required to pay KKR $103.4 million if it terminates the agreement. KKR would have to pay Gardner Denver $263.1 million if the private equity firm fails to complete the agreement.