Regal Rexnord Corporation (RRX) on Thursday announced that it has reached a definitive agreement to buy Altra Industrial Motion Corp. (AIMC) in an all- cash transaction for $62 per share.
Altra is a global designer and manufacturer of a wide range of highly engineered motion control, automation, and power transmission solutions. The transaction values Altra at $4.95 billion, representing 13.6x LTM Adjusted EBITDA, or 9.5x after factoring estimated run-rate cost synergies.
The transaction is expected to close in the first half of 2023 after requisite approvals.
With the addition of Altra, Regal Rexnord expects 2022 pro forma revenue of about $7.2 billion, Adjusted EBITDA of about $1.5 billion, and an Adjusted EBITDA margin of approximately 21 percent. Based on the growth and margin outlook for the combined business, and after including $160 million in annualized run rate cost synergies, Regal Rexnord targets 2025 pro forma revenue of about $8.3 billion, 2025 Adjusted EBITDA of $2.1 billion, and an Adjusted EBITDA margin of more than 25 percent.
J.P. Morgan and Incentrum Group are serving as financial advisors to Regal Rexnord, and Sidley Austin LLP is serving as legal counsel.
Regal Rexnord also announced preliminary third quarter results which showed earnings per share falling to $1.80, from $1.95 in the previous period. Adjusted earnings per share dropped to $2.66, from $2.88 earlier.
EPS for the year 2022 is seen in the range of $7.15 to $7.55, whereas adjusted EPS is seen in the range of $10.35 to $10.75.
Shares of Regal Rexnord Corporation closed Wednesday’s trading at $152.35, up $1.27 or 0.84 percent from the previous close.
Shares of Altra Industrial Motion Corp are currently trading in pre-market at $59.84, up $19.59 or 48.67 percent from the previous close.
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