October 28, 2022 | Industrials | North America | Ended

Altra Industrial / Regal Rexnord: Deal Insight

Regal Rexnord will acquire rival machine parts manufacturer Altra Industrial Motion in a $5.0bn takeover, the companies announced on 27-Oct-22. Regal is offering $62 per share, representing a 54% one-day premium, which equates to 13.6x LTM adjusted EBITDA, or 9.5x if run-rate cost synergies are factored-in. The deal is subject to antitrust and foreign direct investment approvals and an Altra shareholder vote (50%); an acquirer vote is not required. The parties will file the preliminary proxy within 20 business days (by 23-Nov-22) and notify under HSR within 10 business days (by 8-Nov-22). The merger agreement is standard, with a MAC clause that carves out war and pandemics. It also contains a burdensome condition that does not specify a monetary restriction but prevents the companies from offering remedies that “would reasonably be expected to have a material adverse effect” on Regal and Altra, taken as together. Altra is bound by ‘no shop’ restrictions and Regal has debt financing in place from JPMorgan, which has committed $7.5bn to fund the acquisition and refinance Altra’s existing debt. The companies expect the deal to close in ...

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