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Gardner to be Acquired by Kohlberg

GS KKR NPO

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The engineered products manufacturer, Gardner Denver Inc. announced that it has entered into a definitive agreement to be sold to a global investment firm, Kohlberg Kravis Roberts & Co. L.P. (KKR - Snapshot Report) for $3.9 billion. Per the agreement, Kohlberg will acquire Gardner for $76.0 per share in cash.

The merger, which is approved by the board of directors of Gardner, however, is subject to the approval of its shareholders. The merger is expected to take effect in the third quarter of 2013.

Gardner began considering strategic alternatives in late October last year, which also included a possibility of sale. The agreed per share price of merger corresponds to a premium of 39% to Gardner’s share price on Oct 24, 2012.

This merger seems to fit well with the business strategies of Kohlberg, since it will increase the investment firm’s market presence as well as boost its revenues. Gardner’s CEO claims that the merger will prove to be beneficial for its shareholders as Kohlberg has an impressive track record of growing the businesses that its acquires.

Goldman Sachs Group Inc. (GS - Analyst Report) acted as the financial adviser to Gardner while UBS Securities LLC and Simmons & Company International acted as the financial advisors for Kohlberg.

Last month, Gardner reported its results for fourth quarter 2012, with earnings per share as well as revenue beating the Zacks Consensus Estimate. However, it missed the top line as well as bottom line compared with the year ago results. The pump maker's market has so far faced many competitions amid a historic boom in natural gas production while Gardner has focused on boosting its margins through measures such as restructuring its European operations.

Gardner currently holds a Zacks Rank #2 (Buy). Another stock worth a look in the industry is EnPro Industries Inc. (NPO - Snapshot Report), carrying a Zacks Rank #1 (Strong Buy).

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