Press Release Details
Colfax Offer to Acquire Charter International for $2.4 Billion in Cash and Stock
The acquisition, which has been unanimously recommended by the Board of Directors of Charter, will accelerate Colfax's growth strategy and move Colfax toward its vision: a multi-platform enterprise with a strong global footprint. Charter is a leading player in key industrial markets and its strong brands will enhance Colfax's business mix and profile, as well as provide significant growth opportunities. Charter's Howden division, which focuses on air and gas handling, will complement and extend Colfax's existing fluid handling business and Charter's ESAB business, which provides welding and cutting solutions, will become the foundation of a new growth platform for Colfax.
"This is a transformational acquisition for Colfax that accelerates our growth strategy, enhances our business profile and continues our journey to becoming a premier global enterprise," said
The combination is expected to:
- Enhance Colfax's business profile by providing a meaningful recurring revenue stream and considerable exposure to emerging markets
- Enable the combined company to benefit from strong secular growth drivers, with a balance of short- and long-cycle businesses
- Improve both margin and return on invested capital at Charter through application of the Colfax Business System
- Provide an additional growth platform in the fragmented welding and cutting industry
- Deliver significant earnings accretion as well as double digit returns on invested capital within three to five years
Under the terms of the offer, eligible Charter shareholders will be permitted to elect, subject to availability, to vary the proportions in which they receive cash and Colfax common shares. Such elections will be satisfied to the extent that other Charter
shareholders make off-setting elections. To the extent that elections cannot be satisfied in full, they will be scaled down on a pro rata basis. The transaction values Charter's fully diluted share capital at approximately
The transaction will be financed by Colfax with a combination of balance sheet cash, new bank debt and new equity. The new equity of
Charter, headquartered in
It is intended that the transaction will be implemented by a court-sanctioned scheme of arrangement under the laws of Jersey and is subject to the approval of both companies' shareholders, court approval in Jersey and other terms and conditions set out in the joint offer announcement released by Colfax and Charter earlier today. This announcement should be read in conjunction with that announcement, which is available at www.colfaxcorp.com.
Deutsche Bank and
Colfax will host a conference call to discuss the transaction today at
Colfax's strategy is to drive aggressive growth within its existing business through a combination of organic initiatives and acquisitions, and periodically to add new growth platforms. The Company has completed 13 acquisitions since its founding in 1995 and takes a disciplined approach to acquisitions with clearly defined criteria:
- Strong brand names
- Leading market positions
- Global reach and manufacturing
- Attractive secular growth drivers
- Differentiated products/technologies
- Complementary end market/geographic focus (for transactions within existing platforms)
- Lengthy bolt-on acquisition runway (for transactions establishing new platforms)
- Accretive to earnings
- Double digit return on invested capital within three to five years
Colfax recently reported robust second quarter earnings. The Company believes the strong performance of its base business provides a solid foundation for complementary acquisitions such as Charter.
CAUTIONARY NOTE CONCERNING FORWARD LOOKING STATEMENTS
This press release and the information may contain certain statements about Colfax and Charter that are or may be "forward-looking statements"— that is, statements related to future, not past, events, including forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations of the management of Colfax and Charter (as the case may be) and are naturally subject to uncertainty and changes in circumstances, and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause Colfax's results to differ materially from current expectations include, but are not limited to factors detailed in Colfax's reports filed with the
There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, the satisfaction of the conditions to the Offer and other risks related to the Offer and actions related thereto. Additional particular uncertainties that could cause Colfax's actual results to be materially different than those expressed in its forward-looking statements include: risks associated with Colfax's international operations; significant movements in foreign currency exchange rates; changes in the general economy, as well as the cyclical nature of Colfax's markets; Colfax's ability to accurately estimate the cost of or realize savings from Colfax's restructuring programs; availability and cost of raw materials, parts and components used in Colfax products; the competitive environment in Colfax's industry; Colfax's ability to identify, finance, acquire and successfully integrate attractive acquisition targets, including Charter should the Offer be successful; Colfax's ability to complete the acquisition of Charter as planned, and risks relating to any unforeseen liabilities of Charter; the amount of and Colfax's ability to estimate its asbestos-related liabilities; material disruption at any of Colfax's significant manufacturing facilities; the solvency of Colfax's insurers and the likelihood of their payment for asbestos-related costs; Colfax's ability to manage and grow its business and execution of Colfax's business and growth strategies; Colfax's recent substantial leadership turnover and realignment; Colfax's ability and the ability its customers to access required capital at a reasonable costs; Colfax's ability to expand its business in its targeted markets; Colfax's ability to cross-sell its product portfolio to existing customers; the level of capital investment and expenditures by Colfax customers in its strategic markets; Colfax's financial performance; Colfax's ability to identify, address and remediate any material weakness in its internal control over financial reporting; Colfax's ability to achieve or maintain credit ratings (in light of the Offer and financing of the Offer or otherwise) and the impact on its funding costs and competitive position if Colfax does not do so; and others risks and factors as disclosed in Colfax's Annual Report on Form 10-K under the caption "Risk Factors" as well those disclosed or to be disclosed in the Offer Document. Other unknown or unpredictable factors could also cause actual results to differ materially from those in any forward-looking statement.
Due to such uncertainties and risks, readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. None of Colfax or Charter undertakes any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.
Nothing contained herein shall be deemed to be a forecast, projection or estimate of the future financial performance of Colfax or any of its subsidiaries, the Charter group or the combined business following completion of the Offer, unless otherwise stated.
CERTAIN CONSIDERATIONS UNDER THE SECURITIES ACT OF 1933
The securities of Colfax referred to in this press release have not been registered under the Securities Act of 1933 (the "Act"), and may not be offered or sold in
The issuance of Colfax shares pursuant to the Scheme of Arrangement will not be registered under the Act, and will be issued pursuant to the exemption provided by Section 3(a)(10) under the Act. In the event that Colfax determines to conduct the acquisition pursuant to an offer or otherwise in a manner that is not exempt from the registration requirements of the Act, it will file a registration statement with the
Under Rule 8.3(a) of the
Disclosures are therefore required to be made in respect of the stock of Colfax,
An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4). Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
Deutsche Bank, which is authorised and regulated in the
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