KKR & Co, the private-equity firm run by Henry Kravis and George Roberts, agreed to buy industrial equipment maker Gardner Denver Inc for about US$3.7 billion after raising its offer.
KKR is to pay US$76 a share for Wayne, Pennsylvania-based Gardner Denver, the companies said on Friday in a statement.
That is a 39 percent premium to the price on Oct. 24, the day before the company announced it was exploring a sale.
KKR last month offered US$75 a share.
“The long-term future of Gardner Denver is bright,” Pete Stavros, head of KKR’s industrials team, said in the statement.
The deal, expected to close in the third quarter, is valued at US$3.9 billion, including the assumption of Gardner Denver’s debt.
Gardner Denver said in October last year it was reviewing options including a sale after ValueAct Holdings LP, which disclosed in July last year that it had become the third-largest investor, pressed for a deal as “the most effective way to deliver maximum value to shareholders.”
The sale to KKR comes after rival SPX Corp and private-equity firms Advent International Corp and the team of Onex Corp and TPG Capital walked away from takeover discussions, people familiar with the matter said.
Gardner Denver rose 1.2 percent to US$74.74 at the close of trading in New York. The company makes compressors, pumps and other products for industries including manufacturing and energy exploration. Other suitors for the company included private-equity firms CCMP Capital Advisors LLC, Bain Capital LLC and Blackstone Group LP.
KKR climbed 1.2 percent to US$19.03. The stock has gained 25 percent this year, outpacing the 8.8 percent increase in the Standard & Poor’s 500 Index of large US companies.
The deal is subject to several provisions, including approval by China’s commerce ministry, South Africa’s competition commission and US and European antitrust regulators, according to a Gardner Denver filing with the US Securities and Exchange Commission on Friday.
The company would be required to pay KKR a fee of US$103.4 million if it terminates the agreement, and KKR would have to pay Gardner Denver US$263.1 million if the firm fails to complete the deal, according to the filing.
The pump maker’s market has faced an influx of competitors amid a historic boom in natural gas production, and Gardner Denver has since focused on boosting margins through measures such as restructuring its European operations.
The manufacturer estimated the cost cuts will result in annualized pretax savings of US$35 million to US$40 million by 2016.
Shares of Gardner Denver peaked at US$91.50 on July 22, 2011.
ValueAct held a 5.1 percent stake in the company as of Feb. 22, according to data compiled by Bloomberg.