MAYFIELD HEIGHTS, Ohio—Parker Hannifin Corp., the Mayfield Heights-based maker of motion and control technologies, said July 29 that it has agreed to buy Exotic Metals Forming Co. of Kent, Wash., for $1.73 billion in cash.
Adjusted for about $170 million of expected tax benefits, the net transaction value is about $1.56 billion, Parker said in a news release. The transaction has been approved by the boards of both companies and is subject to customary closing conditions, including regulatory approvals. Parker said the deal is expected to be completed in the next two to three months.
Privately held Exotic Metals, founded in 1966, makes high-temperature, high-pressure air and exhaust management systems for aircraft and engines. Parker said in the release that Exotic Metals has annual sales of about $450 million and 1,600 employees working in three U.S. locations.
Tom Williams, Parker chairman and CEO, said in a statement that the acquisition "reinforces our commitment to investing in high-growth, attractive-margin businesses and accelerates our goal of achieving top-quartile financial performance among our diversified industrial peers." He said Exotic Metals "will significantly bolster our already strong aerospace offering with complementary products for performance-critical applications. As a result of the acquisition, we will be better positioned to accelerate growth through increased aftermarket opportunities and expanded content on industry-leading programs."
Parker expects the transaction to be "accretive to organic growth, EBITDA margins, EPS and cash flow, excluding one-time costs," according to the release.
Upon the closing of this transaction, Parker plans to have Exotic Metals operate as a standalone division within Parker's Aerospace Group.
Bill Binder, president and CEO of Exotic Metals, said in the release that Parker "provides our business access to additional platforms and opportunities to expand our aftermarket offerings." He added that both companies have "long, successful histories" of working with the aerospace industry.
Parker said in the release that it plans to finance the transaction using new debt. When the deal is completed, "Parker expects to maintain a high investment-grade credit profile," according to the release.
The transaction is not expected to impact Parker's dividend payout target of 30 percent to 35 percent average percent of net income over a five-year period.