Parker-Hannifin To Buy Lord Corp. For $3.6B: 'Companies Are Very Much Aligned'

Parker Hannifin Corporation PH announced Monday that it has entered an agreement to buy privately held LORD Corp. for about $3.675 billion in cash. 

What Happened

Cary, North Carolina-based Lord offers advanced adhesives, coatings, specialty materials and vibration amd motion control technologies. The company has 3,100 employees and annual sales of about $1.1 billion.

Parker is financing the acquisition with new debt. 

The acquisition increases Parker's engineered materials product and solutions offerings, as well as its complementary products in core aerospace and defense, high-value automotive and industrial markets, Parker said in the Monday press release.

Why It's Important

Cleveland-based Parker expects to realize about $125 million in pre-tax run-rate cost synergies by 2023 with the purchase of Lord Corp at a cost of about $80 million. 

The transaction is projected to be accretive to Parker's organic growth, EBITDA margins, cash flow and EPS within the first year and achieve ROIC in the high single digits by year five after adjusting for one-time costs and deal-related amortization, Parker said. 

"With complementary business segments, coming together with Parker enables LORD to carry out our grander vision. Parker is already a large tier one supplier in many areas, allowing our business lines immediate access to growth, additional markets, applications and new customers," Ed Auslander, president and CEO of Lord, said in a statement.

"In addition, the two companies are very much aligned when it comes to core values, great business acumen and cultural fit."

What's Next

The boards of both Parker Hannifin and Lord Corp. have approved the acquisition. Parker said it expects the deal to close within the next four to six months contingent upon customary closing conditions and regulatory approval.

Once the sale is complete, Lord will be combined with Parker's engineered materials group. 

Parker-Hannifin shares were up 1.57 percent at $185.87 at the time of publication Monday. 

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