Columbus McKinnon, a designer, manufacturer and marketer of intelligent motion solutions, products, technologies and services for material handling, executed a definitive agreement to acquire Dorner Manufacturing, an automation solutions company providing patented technologies in the design, application, manufacturing and integration of high-precision conveying systems, from global private markets firm EQT.
“The acquisition of Dorner provides a catalyst for growth in extremely attractive markets and begins the process of reimagining the future of Columbus McKinnon,” David J. Wilson, president and CEO of Columbus McKinnon, said. “Dorner advances our strategy to broaden expertise in intelligent motion solutions for material handling, provides access to high-growth secular markets and strengthens our earnings power. Their deep technical expertise and experienced management team are an excellent complement to our global organization. In addition, their offerings provide a critical link to industrial automation, complementing our leadership position in material handling. We believe that the acquisition of Dorner is a defining move that advances our blueprint for growth 2.0 strategy and enables multiple opportunities for future growth.”
Dorner has achieved a 12% compound annual growth rate over the last five years, outpacing industry growth rates of approximately 6% to 8%, according to Columbus McKinnon.
The cash transaction for this acquisition is valued at $485 million and is expected to close early in fiscal Q1/22, subject to typical closing conditions and regulatory requirements. The purchase price represents 15.5x fiscal 2021 expected adjusted EBITDA or approximately 13.5x after year-two synergies. Columbus McKinnon projects nearly $5 million in expected annual cost synergies will be achieved over the next two years
J.P. Morgan Chase Bank is administrative agent on Columbus McKinnon’s existing credit facilities and provided committed underwritten debt financing in support of this acquisition. The permanent financing plan anticipates a mix of debt and equity, targeting a net leverage ratio in the near-term of under 4x adjusted EBITDA, with expectations of reducing the net leverage ratio below Columbus McKinnon’s targeted 2x net debt to adjusted EBITDA within two years.
“We have consistently demonstrated our ability to quickly de-lever our balance sheet following acquisitions,” Gregory P. Rustowicz, CFO of Columbus McKinnon, said. “We believe that our strong cash generation, supplemented with Dorner’s financial performance, supports our funding plan. The initial financing structure provides flexibility for timely execution of the transaction. We expect to put in place a permanent financing structure after closing with new debt and equity which provides a permanent capital structure that is flexible and low cost. We expect the acquisition to be accretive in the first year.”
J.P. Morgan Securities acted as exclusive financial advisor on this transaction. DLA Piper served as outside counsel on the transaction and financing.
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