LONDON, UK / ACCESSWIRE / September 27, 2017 / Pro-Trader Daily looks at the latest corporate events and news making the headlines for Circor International Inc. (NYSE: CIR) ("CIRCOR"), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/'symbol=CIR. The Company announced on September 25, 2017, the acquisition of the fluid handling business of Colfax Corp. (NYSE: CFX). CIRCOR is a top provider of flow control solutions for engineering industries such as oil & gas, power, aerospace, processes, and general industries. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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CIRCOR has signed the deal for US$855 million constituting of cash, newly issued CIRCOR shares, and taking over of the pension plan liabilities of Colfax's fluid handling business. The cash amount will be of US$542 million; 3.3 million shares will be issued to Colfax valued at US$163 million, and global pensions are expected to bring a net liability of US$150 million on a pre-tax basis for the Company. Upon completion of the acquisition, Colfax will hold 16% of the Company. Colfax has agreed to certain restrictions which will apply on the transfer of shares along with a six-month lockup.
Strategic Sense
The acquisition adds to the product offering portfolio of the Company with new critical flow control solutions and expansion in new markets. Colfax's recognized brands and installations will add to the capabilities to deliver flow control solutions to new and existing markets. The end markets will get diversified with industrial sectors like commercial marine into new geographical areas. The return on the acquisition is expected to be generated by the fourth year.
Financial Benefits
Colfax boasts of high-profit margins with synergy opportunities for the Company and the transaction is expected to add to its revenues from the first year onwards. The Company gave financial guidance for its Q3 2017 net revenue and adjusted EPS to be in alignment with the expectations of the revenues from this deal. The Company expects to have a net debt-to-EBIDTA ratio of 5.0x upon completion, which it hopes to reduce below 4.0x by 2018 and to 3.0x by 2019. Cost synergies of the deal of $23 million are expected to be gained by the fourth year on the back of improved supply chain, SG&A cost reductions, and manufacturing rationalizations. The Company will incur US$10 million one-time costs to achieve this. The combined Company will have US$1.1 billion in revenues with trailing 12 months ended June 2017.
For Colfax, the sale is a new step forward in its growth strategy with the partnership to take its portfolio to various markets. Citi and BDT & Company, LLC acted as financial advisors to Colfax, while Skadden, Arps, Slate, Meagher & Flom LLP served as its legal advisors.
Last Close Stock Review
On Tuesday, September 26, 2017, the stock closed the trading session at $52.80, falling 2.49% from its previous closing price of $54.15. A total volume of 142.98 thousand shares have exchanged hands, which was higher than the 3-month average volume of 82.86 thousand shares. Circor Intl.'s stock price rallied 10.72% in the last one month. The stock is trading at a PE ratio of 54.72 and has a dividend yield of 0.28%. The stock currently has a market cap of $866.45 million.
At the closing bell, on Tuesday, September 26, 2017, Colfax's stock slightly slipped 0.97%, ending the trading session at $41.65. A total volume of 707.51 thousand shares have exchanged hands, which was higher than the 3-month average volume of 698.34 thousand shares. The Company's stock price soared 9.49% in the last three months, 8.49% in the past six months, and 42.59% in the previous twelve months. Moreover, the stock surged 15.92% since the start of the year. The stock is trading at a PE ratio of 32.64 and currently has a market cap of $5.00 billion.
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