SKF to acquire US-based Kaydon Corp for $1.25 billion
05 September 2013
SKF, the world's biggest bearings maker, today announced that it would acquire US-based Kaydon Corporation in an all-cash deal valued at about $1.25 billion.
The deal, which includes $95 million of net debt, will be paid through existing cash and credit lines and will be accretive to SKF earnings in year one.
Gotenburg, Sweden-based SKF has offered to pay $35.5 per share, a 22 per cent premium to Kaydon's yesterday closing price.
Kaydon is a diversified industrial manufacturer in three business areas, friction control products (bearings), velocity control products and specialty products, including environmental services.
The Michigan-based company designs and manufacturers bearings and velocity control products such as industrial shock absorbers, gas springs and vibration isolation products.
Its specialty products include filters and filtrations systems, custom rings and seals as well as environmental services. These products are used by customers in a variety of industries like aerospace, defense, medical, semicon, wind energy, material handling and machine tool.
Kaydon has a global footprint with 62 per cent of its sales generated in North America, 24 per cent in Europe, 12 per cent in Asia Pacific and 2 per cent in the rest of the world.
The company has over 2,100 employees and generated revenues of $475 million last year.
SKF said that the acquisition is in-line with its strategy to strengthen its technology platforms and become a knowledge engineering company.
SKF expects to achieve annual cost synergies of $30 million and $50 million in sales synergies over the next several years.
The addition of Kaydon to the SKF would have given a proforma sales increase for the full year 2012 from SEK 64.6 billion to around SEK 67.7 billion and with an adjusted operating profit from SEK 7.3 billion to around SEK 7.8 billion.
''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,'' said, Tom Johnstone, SKF president and CEO.
''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. In particular this acquisition, combined with our other activities, investments and acquisitions in the last few years, shows our strong commitment to the North American market,'' he added.