KKR to Buy Gardner Denver (GDI) in $3.7 Billion Deal

By on March 12, 2013
Net 1 Bribe Class Action Lawsuit

Private-equity firm KKR & Co. has announced its intention to acquire industrial equipment maker Gardner Denver Inc. (NYSE: GDI) for approximately $3.7 billion.  According to the terms of the buyout, KKR will pay $76 per share, a 39% premium to the trading price on October 24 — the last day before Gardner began shopping itself to suitors.  In February, KKR offered $75 per share.

Despite the premium, several financial commentators have questioned the value of the deal.

“We believe the deal makes a lot of sense for KKR, but we still fail to see how this is the best possible outcome for Gardner Denver,” said BB&T Capital Markets analyst Kevin Maczka.  “We understand KKR’s reluctance to bid against itself as the last remaining bidder, but if $75 was unacceptable, then $76 hardly seems like a victory,”

Kurt Moeller, of Seeking Alpha, wrote an article entitled “Shareholders Should Reject Gardner Denver Buyout As Too Low.”  Moeller concluded that the upside of Gardner’s future financials outweigh KKR’s offer.

Additionally, at least one analyst has set a target price for Gardner’s stock at $85 and according to Thomson Reuters StarMine data the intrinsic value of Gardner’s stock is $85.47.

In December, SPX Corp offered to buy Gardner for $85 but the potential deal did not proceed after SPX shareholders questioned the synergy.