Carpenter Technology Corporation and Latrobe Specialty Metals, Inc. have announced they have entered into a definitive merger agreement whereby Carpenter will acquire Latrobe in a transaction valued at approximately $558 million.
In the transaction, 8.1 million shares of Carpenter stock, subject to certain adjustments for working capital and pension, representing a current equity value of approximately $388 million, will be issued to the current owners including Hicks Equity Partners and The Watermill Group. Carpenter will also pay $170 million in cash to eliminate Latrobe debt at closing and reimburse certain transaction costs.
Acquired by Hicks Equity Partners and The Watermill Group in December 2006, Latrobe manufactures and distributes high-performance materials for aerospace, defence, energy, and other significant applications with manufacturing operations in Pennsylvania, Ohio, Texas, and the United Kingdom and seven distribution centres located throughout the United States.
“Our strategy is to grow through a combination of organic growth initiatives and acquisitions – with a focus on markets that value the technical sophistication of our products,” stated William A. Wulfsohn, President and Chief Executive Officer of Carpenter Technology. “The Latrobe acquisition will provide needed capacity to meet strong customer demand for our premium products, improves our position in attractive segments like aerospace and energy, provides capabilities that will help us commercialize important new product offerings, and offers us improved returns on new capability investments.”
Latrobe’s shareholders will own approximately 15.5% of Carpenter’s outstanding common stock. The transaction is subject to customary closing conditions and regulatory approvals. Closing is expected to occur during the first quarter of FY2012, which ends September 30, 2011.
Edited by: Paul Whittaker, Editor ipmd.net, [email protected]