CIRCOR International [CIR] last Friday said it has agreed to a new bid by the investment firm KKR [KKR] worth about $1.9 billion, topping previous bids by the private company that was forced to up the ante due to an unsolicited offer from the private equity firm
Arcline Investment Management.
KKR’s latest deal with CIRCOR is to acquire the flow control products supplier at $56 per share, up from an initial $49 per share that was then followed by a $51 per share offer earlier last week after Arcline made an unsolicited offer for $52.65 a share.
The $56 per share offer is nearly 10 percent higher than the $51 per share price and represents a 77 percent premium to CIRCOR’s stock price on June 2. KKR has also agreed to provide a full equity backstop to complete the deal and a $125 million termination fee if regulators nix the transaction, and has also agreed to increase the customary reverse termination fee tied to closing obligations from $67 million to $100 million.
CIRCOR has increased its potential termination fee to KKR from $28 million to $42.8 million under certain circumstances if the deal falls through.
Arcline revised its unsolicited offer for CIRCOR to $57 per share, leading to KKR’s $56 per share bid.
“The CIRCOR Board unanimously concluded that the difference in price contemplated by the Arcline proposal is more than offset by the increased deal certainty associated with KKR’s Amended Agreement,” CIRCOR said in a statement last Friday. “KKR’s Amended Agreement also offers greater financing certainty and a clearer and faster path to receiving anticipated antitrust approvals.”
Most of CIRCOR’s sales are with industrial customers with the aerospace and defense industry accounting for 36 percent, or $283 million, of the company’s $787 million in sales in 2022.
CIRCOR still expects the transaction to close in the fourth quarter pending regulatory and shareholder approvals. CIRCOR’s financial advisers on the deal are Evercore and J.P. Morgan.