UK based Edwards Group Ltd a manufacturer of sophisticated vacuum products, abatement systems and related value-added services, is the subject of an acquisition by the Atlas Copco Group a Sweden-based provider of compressors and mining and construction equipment.
The companies have entered into a definitive merger agreement in a transaction valued at up to approximately $1.6bn, including the assumption of debt.
The acquisition of Edwards offers Atlas Copco an opportunity to expand into a growing business which serves industries that are well-known to Atlas Copco. There are several synergies between vacuum and compressed air solutions in sales, service and technology development.
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 £587.5M to £650M and the achievement of an adjusted EBITDA target within the range of £113.9M to £145M.
Edwards had revenues in 2012 of £595M − of which more than half was from business in Asia – and an adjusted EBITDA margin of 19.1%. The reported operating margin was 10.6%, including restructuring costs and amortization of the sellers’ purchase price adjustments, corresponding to about 4% of revenues.
Edwards and Atlas Copco have a complementary businesses fit. The benefits of greater scale will help accelerate Edwards' growth strategy. Upon completion of the transaction, a new Vacuum Solutions Division will be formed within the Atlas Copco Compressor Technique business area, with headquarters at the present Edwards facility in Crawley, UK.
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. If approved, the transaction is expected to close in the first quarter of 2014.