The Edwards group, previously known as Edwards High Vacuum, published a statement on 19 August advising shareholders of an agreed acquisition of the company by Atlas Copco, of Sweden. Shareholders will receive up to $10.50 per share in cash, making the total transaction value approx $1.6Bn, including the debt repayment, the largest acquisition by Atlas Copco for some 14 years. The deal represents an investment of 6.42 times EBITDA. Edwards is quoted on NASDAQ. The Edwards statement is as follows:
Edwards Group Limited (“Edwards”) a leading developer and manufacturer of sophisticated vacuum products, abatement systems and related value-added services, and Atlas Copco Group (“Atlas Copco”), the Sweden-based provider of industrial productivity solutions, today announced that the companies have entered into a definitive merger agreement in a transaction valued at up to approximately $1.6 billion, including the assumption of debt.
Under the terms of the merger agreement, a subsidiary of Atlas Copco will acquire Edwards for a per-share consideration of up to $10.50, which includes a fixed cash payment of $9.25 at closing and an additional payment of up to $1.25 per share post-closing, depending on Edwards’ achievement of 2013 revenue within the range of £587.5 million to £650 million and achievement of a related Adjusted EBITDA target within the range of £113.9 million to £145 million. The transaction is expected to close in the first quarter of 2014.
Depending on the amount of any additional payment, the merger consideration represents a premium of approximately 11% to 26% to Edwards’ 30 day average closing share price of $8.33 up to August 16, 2013, the last trading day prior to this announcement. Edwards priced its initial public offering on The NASDAQ Global Select Market on May 10th 2012 at $8.00 per share.
Edwards’ shareholders representing approximately 84% of the current shares outstanding have entered into voting agreements with Atlas Copco to vote in favor of the merger, subject to the conditions set out in the voting agreements. Further, the Board of Directors of Edwards unanimously recommends the offer to all Edwards shareholders.
Edwards and Atlas Copco have a complementary businesses fit. Both companies share a similar strategic direction, with growth focused on technology leadership and customer service. The benefits of greater scale will help accelerate Edwards’ growth strategy and provide more opportunities for Edwards’ employees. Upon completion of the transaction, a new Vacuum Solutions Division will be formed within the Atlas Copco Compressor Technique business area, with headquarters in Crawley, UK.
Jim Gentilcore, Chief Executive Officer of Edwards, said, “This strategically and financially compelling transaction provides the opportunity for our stockholders to receive an attractive premium for their shares. On top of the cash payment at closing, analyst consensus for the full year and our strong start to the third quarter leads us to believe it is realistic for us to achieve the results that would deliver an additional cash payment towards the upper end of the range to our shareholders.”
Gentilcore continued, “This transaction also delivers many benefits for Edwards’ customers and employees. The two companies share very similar strategic goals, strong brands and leading market positions. The Edwards brand and reputation will benefit from the support, expertise and financial strength that Atlas Copco will bring.”
Ronnie Leten, President and CEO of Atlas Copco, said, “We recognize the strength of Edwards’ people and products as well as their excellence in technology and innovation. We are excited that this professional company will join our Group.”
The merger, which has been unanimously approved by the Boards of Directors of both companies, is subject to shareholder approval, antitrust clearance, and customary closing conditions.
Barclays and Lazard acted as financial advisors to Edwards on the transaction. Legal advisors to Edwards are Davis Polk & Wardwell London LLP,Weil Gotshal & Manges LLP and Maples & Calder.