Industrial machinery manufacturer Circor International has announced its acceptance of investment firm KKR’s revised buyout offer worth $1.7 billion, including debt.
This decision comes in response to a higher bid from an undisclosed third party. Following the news, shares of Circor reached a more than five-year high of $51.87 during early trading, slightly above KKR’s revised offer price of $51 per share.
KKR decided to sweeten its offer after Circor received an unsolicited buyout proposal of $52.65 per share in cash. As part of the revised offer, KKR has also committed to providing a full equity backstop to facilitate the merger. An equity backstop refers to the use of equity financing instead of debt to fund a deal.
The Circor board considered KKR’s offer of $51 per share as superior due to greater funding certainty and a clearer and faster path to obtaining antitrust approvals. Previously, KKR had proposed taking Circor private for $49 per share. Additionally, in the event that the merger fails, KKR has agreed to pay Circor $125 million.
Based on Reuters calculations, the deal represents an equity value of nearly $1.04 billion. The transaction is expected to be finalized in the fourth quarter of this year. Earlier this month, Circor had announced its entry into a $1.6 billion take-private deal with KKR to enhance its presence in the flow-control sector.
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