Kaydon Shares Up 20+% as SKF Announces Purchase of Co. at $35.50/Share in Cash
Kaydon Corporation (NYSE: KDN) and AB SKF announced today that they signed a definitive agreement under which SKF will acquire Kaydon for $35.50 per share in an all-cash transaction that values Kaydon at approximately $1.25 billion, including debt (the “Transaction”).
The purchase price represents a 22% premium to Kaydon's closing stock price on September 4, 2013 and a 21% premium to Kaydon's 30-day volume weighted average stock price. The implied total enterprise value of $1.25 billion represents a multiple of 12.7 times Kaydon's LTM Adjusted EBITDA ($98 million as of June 29, 2013).
James O'Leary, Chairman and Chief Executive Officer of Kaydon, commented, "Our Board believes that the proposed transaction represents a compelling value for our shareholders. We believe that this transaction represents an excellent strategic fit for Kaydon that will allow our market leading businesses to accelerate their growth strategies by joining forces with SKF, a global industry leader. Since 2009, we have repositioned our businesses to take advantage of well defined opportunities beyond purely cyclical drivers while maintaining a strong focus on maximizing shareholder value. This was evidenced by last year's $10.50 special dividend and our consistent focus on maximizing cash returns to our shareholders. I believe this is the right time for this transaction and SKF is the right partner to take our high quality portfolio of businesses to their next level of performance."
Tom Johnstone, SKF President and Chief Executive Officer, stated, “We have followed the development of Kaydon for a long time. They have a strong product portfolio, strong management and a solid financial performance and I am delighted that they will soon be part of the SKF Group. The complementary nature of their products and technologies, their geographical and customer presence and their manufacturing footprint will enable us to even better serve our customers and distributors in the industrial market worldwide.”
Under the terms of the definitive agreement, which has been unanimously approved by both companies' Boards of Directors, SKF will commence a tender offer on or after September 16, 2013 to purchase all of Kaydon's outstanding shares for $35.50 per share in cash. The Transaction is subject to customary terms and conditions and regulatory approvals and is expected to close in the fourth quarter of 2013. Kaydon stockholders will also receive their regular quarterly dividend of $0.20 per share that was declared on July 24, 2013.
Under the terms of the definitive agreement, Kaydon has the right to solicit third parties with respect to alternative acquisition proposals through October 15, 2013 (the "Go-shop Period"). Kaydon does not anticipate that it will disclose any developments with regard to this process unless and until Kaydon's Board of Directors makes a decision with respect to a potential superior proposal. There can be no assurance that this process will result in a superior proposal. The agreement also includes customary breakup fees payable to SKF in connection with the termination of the agreement in certain circumstances.
In connection with the Transaction, Barclays is acting as exclusive financial advisor to Kaydon and Paul Hastings LLP is serving as Kaydon's legal counsel.
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