Parker Hannifin to Buy Filtration Maker Clarcor -- 3rd Update
December 01 2016 - 2:48PM
Dow Jones News
By Bob Tita
Parker Hannifin Corp. announced plans Thursday to buy Clarcor
Inc. for about $4 billion, providing access to the profitable
market for replacement filters for trucks and construction
equipment made by Caterpillar Inc. and others.
About 80% of Clarcor's $1.4 billion of annual sales comes from
replacement filters also used on equipment such as excavators,
railroad locomotives, farm tractors and natural gas-powered
turbines
Parker makes hydraulic systems, electronics and other components
for Deere & Co., General Electric Co., Boeing Co. and other
equipment manufacturers whose products typically remains in service
for a long time, requiring service and replacement parts.
"I would characterize this as a hand-in-glove of our two
companies being put together," said Tom Williams, Parker Hannifin's
Chief Executive
Following the acquisition, Parker's filtration business is
expected to generate $2.6 billion a year in sales, or about 20% of
total revenue.
Franklin, Tenn.-based Clarcor maintains a portfolio of
well-known aftermarket filter brands, including Purolator, Baldwin
and Clark.
Parker has agreed to pay $83 a share for Clarcor's stock, an 18%
premium to its closing price Wednesday. Parker is funding the deal
with cash and debt. The companies valued the deal at $4.3 billion
including debt.
Clarcor's stock was recently trading up 16.9% at $82.38.
Cleveland-based Parker expects the acquisition to increase
earnings per share, after certain costs are taken out, but didn't
offer specific details. It is expected to yield annual cost savings
of about $140 million in the third year after closing.
The proposed deal is expected to be completed by the first
quarter of Parker's next fiscal year, which begins July 1, 2017. It
has been approved by both companies' boards, but will require
approval by Clarcor shareholders as well.
Mr. Williams said he doesn't expect the acquisition will require
any divestitures to comply with antitrust regulations, based on the
investigation the companies did before the deal.
Parker's stock was recently up 2.9% at $142.89.
Austen Hufford contributed to this article.
Write to Bob Tita at robert.tita@wsj.com
(END) Dow Jones Newswires
December 01, 2016 14:33 ET (19:33 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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