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Altra Industrial's Unit to Merge With Fortive's A&S Business
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Altra Industrial Motion Corp.’s business collaboration with four companies of Automation and Specialty (“A&S”) business of Fortive Corporation (FTV - Free Report) has progressed further. Fortive has disclosed the split-off ratio of its A&S business.
The agreement was signed in March 2018. Essentially, Fortive’s A&S business is a platform for Fortive’s Industrial Technologies segment. With brands like Kollmorgen, Dynapar, Thomson, Portescap, Hengstler and Jacobs Vehicle Systems, Fortive A&S engages in supplying equipment for use in robotics, medical devices, industrial automation and precision control end-markets.
Inside the Headline
As disclosed, for every share of Fortive its shareholders will receive 2.2117 shares of Stevens Holding Company, Inc. It’s worth noting here that Stevens is a subsidiary of Fortive that holds the Automation and Specialty business. As many as 15,824,931 shares of Fortive are estimated to be accepted for exchange.
As the exchange offer gets completed on Sep 26, 2018, Stevens is going to be merged with Altra Industrial’s subsidiary. After the merger, Stevens’ shareholders will have the right to receive one share of Altra Industrial for every share of Stevens.
Upon completion of the exchange offer and merger, Altra Industrial will effectively complete part of the business collaboration with Fortive. The other part will include direct buying of certain assets of Fortive.
Snapshot of Business Collaboration
As per the agreement, Altra Industrial will buy Kollmorgyen, Thomson, Portescap and Jacobs Vehicle Systems businesses of Fortive A&S. These assets generated combined revenues of roughly $907 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $220 million in 2017.
The business collaboration — structured to be tax-free for shareholders of both Altra Industrial and Fortive — has been valued at $3 billion. The transaction value will comprise of $1.4 billion in cash payment and Fortive’s debt reduction as well as the issuance of 35 million of Altra Industrial’s shares worth $1.6 billion to Fortive’s shareholders.
Altra Industrial will directly buy certain assets of Fortive while the other part of the transaction will be executed as a Reverse Morris Trust, under which shares of new Fortive subsidiary — formed especially with Fortive A&S assets — will be distributed to Fortive’s shareholders. This new Fortive subsidiary will be merged with Altra Industrial’s subsidiary, in lieu of 35 million shares.
The collaboration is likely to be completed by 2018-end.
Benefits of Business Collaboration
Headquartered in Braintree, MA, the combined company will retain Altra Industrial’s name and trade on NASDAQ under the same symbol. It will operate through 52 manufacturing facilities, 25 service centers and an employee base of 9,300. Of the total shareholding in the combined company, roughly 54% will be with shareholders of Fortive. The rest will be with Altra Industrial’s shareholders.
This global leader in motion control and power transmission will have greater access to end markets, solid product offering for customers and better technological expertise. Its combined revenues will be $1.8 billion while EBITDA (pre-synergies) will be roughly $350 million and EBITDA margin will be 20%. Earnings per share accretion are anticipated immediately. Free cash flow generation will likely exceed $1 billion in five years after formation, while annual cost synergies of $46 million and revenue synergies of $6 million from business expansion in new markets will be realized by the fourth year.
Zacks Rank & Key Picks
With a market capitalization of nearly $1.3 billion, Altra Industrial currently carries a Zacks Rank #3 (Hold).
In the past 60 days, the Zacks Consensus Estimate for earnings on the stock remained stable at $2.54 per share for 2018 and $3.06 for 2019. On a year-over-year basis, these estimates represent growth of 23.9% for 2018 and 20.5% for 2019.
In the past 60 days, earnings estimates for both the stocks have improved for the current year and the next. The average positive earnings surprise for the last four quarters was 7.91% for Colfax and 101.32% for DXP Enterprises.
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Altra Industrial's Unit to Merge With Fortive's A&S Business
Altra Industrial Motion Corp.’s business collaboration with four companies of Automation and Specialty (“A&S”) business of Fortive Corporation (FTV - Free Report) has progressed further. Fortive has disclosed the split-off ratio of its A&S business.
The agreement was signed in March 2018. Essentially, Fortive’s A&S business is a platform for Fortive’s Industrial Technologies segment. With brands like Kollmorgen, Dynapar, Thomson, Portescap, Hengstler and Jacobs Vehicle Systems, Fortive A&S engages in supplying equipment for use in robotics, medical devices, industrial automation and precision control end-markets.
Inside the Headline
As disclosed, for every share of Fortive its shareholders will receive 2.2117 shares of Stevens Holding Company, Inc. It’s worth noting here that Stevens is a subsidiary of Fortive that holds the Automation and Specialty business. As many as 15,824,931 shares of Fortive are estimated to be accepted for exchange.
As the exchange offer gets completed on Sep 26, 2018, Stevens is going to be merged with Altra Industrial’s subsidiary. After the merger, Stevens’ shareholders will have the right to receive one share of Altra Industrial for every share of Stevens.
Upon completion of the exchange offer and merger, Altra Industrial will effectively complete part of the business collaboration with Fortive. The other part will include direct buying of certain assets of Fortive.
Snapshot of Business Collaboration
As per the agreement, Altra Industrial will buy Kollmorgyen, Thomson, Portescap and Jacobs Vehicle Systems businesses of Fortive A&S. These assets generated combined revenues of roughly $907 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $220 million in 2017.
The business collaboration — structured to be tax-free for shareholders of both Altra Industrial and Fortive — has been valued at $3 billion. The transaction value will comprise of $1.4 billion in cash payment and Fortive’s debt reduction as well as the issuance of 35 million of Altra Industrial’s shares worth $1.6 billion to Fortive’s shareholders.
Altra Industrial will directly buy certain assets of Fortive while the other part of the transaction will be executed as a Reverse Morris Trust, under which shares of new Fortive subsidiary — formed especially with Fortive A&S assets — will be distributed to Fortive’s shareholders. This new Fortive subsidiary will be merged with Altra Industrial’s subsidiary, in lieu of 35 million shares.
The collaboration is likely to be completed by 2018-end.
Benefits of Business Collaboration
Headquartered in Braintree, MA, the combined company will retain Altra Industrial’s name and trade on NASDAQ under the same symbol. It will operate through 52 manufacturing facilities, 25 service centers and an employee base of 9,300. Of the total shareholding in the combined company, roughly 54% will be with shareholders of Fortive. The rest will be with Altra Industrial’s shareholders.
This global leader in motion control and power transmission will have greater access to end markets, solid product offering for customers and better technological expertise. Its combined revenues will be $1.8 billion while EBITDA (pre-synergies) will be roughly $350 million and EBITDA margin will be 20%. Earnings per share accretion are anticipated immediately. Free cash flow generation will likely exceed $1 billion in five years after formation, while annual cost synergies of $46 million and revenue synergies of $6 million from business expansion in new markets will be realized by the fourth year.
Zacks Rank & Key Picks
With a market capitalization of nearly $1.3 billion, Altra Industrial currently carries a Zacks Rank #3 (Hold).
In the past 60 days, the Zacks Consensus Estimate for earnings on the stock remained stable at $2.54 per share for 2018 and $3.06 for 2019. On a year-over-year basis, these estimates represent growth of 23.9% for 2018 and 20.5% for 2019.
Altra Industrial Motion Corp. Price and Consensus
Altra Industrial Motion Corp. Price and Consensus | Altra Industrial Motion Corp. Quote
In the past three months, shares of Altra Industrial Motion have declined 2.8%, underperforming 12.5% increase recorded by the industry.
Two key players in the industry, sporting a Zacks Rank #1 (Strong Buy), are Colfax Corporation and DXP Enterprises, Inc. (DXPE - Free Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for both the stocks have improved for the current year and the next. The average positive earnings surprise for the last four quarters was 7.91% for Colfax and 101.32% for DXP Enterprises.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>