- Strategically Strengthens Parker’s Portfolio of Attractive Margin, High Growth Businesses
- Adds Approximately
$1.1 Billionin Annual Sales to Engineered Materials with Complementary Products
- Expected to Be Accretive to Parker’s Organic Growth, EBITDA Margin, Cash Flow and EPS
- Culturally Aligned with Rich History of Innovation and Product Reliability
- Strengthens Materials Science Capabilities, Electrification and Aerospace Product Offerings
- Parker to Host Conference Call Today at
8:30 AM ET
LORD, headquartered in
“This strategic transaction will reinforce our stated objective to invest in attractive margin, growth businesses, such as engineered materials, that accelerate us towards top-quartile financial performance,” said
“This transaction will meaningfully transform our portfolio. We anticipate a smooth closing of the transaction and integration of our two businesses, and through adoption of The Win Strategy™ we believe we can capture significant operational synergies. The combination of Parker and LORD is expected to drive significant value for Parker shareholders and be accretive to organic growth, EBITDA margins, cash flow and EPS, excluding one-time costs and deal related amortization.”
Delivers Compelling Financial and Strategic Benefits
- Greatly Expands Parker’s Engineered Materials Business Adding Strong Brands: LORD’s unique and proprietary products, solutions and technologies for mission-critical applications will increase Parker’s overall engineered materials product and solutions offerings to enable a stronger value proposition for customers. LORD’s portfolio includes strong brands such as LORD®, Chemlok®, FUSOR®, Maxlok®, LORD Adhesives®, Versilok®, LokRealease®, CoolTherm®, LORD® High Capacity Laminate (HCL) Elastomeric Bearings, Dynaflex®, and SensorCloud™. These brands reflect trusted, safe and reliable products that deliver critical solutions at a high value.
- Complementary Products and Markets: LORD will strengthen Parker’s offering of complementary products in core aerospace and defense, high-value automotive and industrial markets and enhance opportunities to capitalize on emerging electrification and lightweighting trends. LORD serves a global, blue-chip customer base and consistently serves partners through the entire product lifecycle.
- Substantial Synergy Potential: Parker expects to realize approximately
$125 millionin pre-tax run-rate cost synergies by full-year 2023. The cumulative cost to achieve these synergies is expected to be approximately $80 million. Synergies are expected to come from implementation of Win Strategy initiatives such as supply chain and lean productivity, and SG&A. Cross-selling opportunities and global market distribution are expected to provide incremental revenue synergies over time.
- Adds Significant Shareholder Value and is Accretive to EBITDA Margins: The transaction is expected to be accretive to Parker’s organic growth, EBITDA margins, cash flow and EPS within the first 12 months, and to achieve high single-digit ROIC by year five, after adjusting for one-time costs and deal related amortization.
Organization and Leadership
Upon closing of the transaction, LORD will be combined with Parker’s
Williams added, “We look forward to joining our teams and cultures, each of which places significant focus on safety, engaged people participating in high performance teams, customer experience, profitable growth and top quartile performance. Our shared values, built over the long histories of both companies, make our two companies an ideal match.”
Financing and Dividend
Parker plans to finance the transaction using new debt. Following the completion of the transaction, Parker expects to maintain a high investment grade credit profile.
The transaction is not expected to impact Parker’s dividend payout target averaging approximately 30-35% of net income over a five-year period, while maintaining its record of annual dividend increases.
Approvals and Time to Closing
The transaction is expected to be completed within the next four to six months and is subject to customary closing conditions, including receipt of applicable regulatory approvals.
Conference Call and Webcast Information
Parker will host a conference call today,
A webcast replay will also be available on Parker's website in the Investor Relations section.
Cautionary Statement Regarding Forward-Looking Statements
Forward-looking statements contained in this and other written and oral reports are made based on known events and circumstances at the time of release, and as such, are subject in the future to unforeseen uncertainties and risks. These statements may be identified from the use of forward-looking terminology such as “anticipates,” “believes,” “may,” “should,” “could,” “potential,” “continues,” “plans,” “forecasts,” “estimates,” “projects,” “predicts,” “would,” “intends,” “anticipates,” “expects,” “targets,” “is likely,” “will,” or the negative of these terms and similar expressions, and include all statements regarding future performance, earnings projections, events or developments. Parker cautions readers not to place undue reliance on these statements. The risks and uncertainties in connection with such forward-looking statements related to the proposed transaction include, but are not limited to, the occurrence of any event, change or other circumstances that could delay the closing of the proposed transaction; the possibility of non-consummation of the proposed transaction and termination of the merger agreement; the failure to satisfy any of the conditions to the proposed transaction set forth in the merger agreement; the possibility that a governmental entity may prohibit the consummation of the proposed transaction or may delay or refuse to grant a necessary regulatory approval in connection with the proposed transaction, or that in order for the parties to obtain any such regulatory approvals, conditions are imposed that adversely affect the anticipated benefits from the proposed transaction or cause the parties to abandon the proposed transaction; adverse effects on Parker’s common stock because of the failure to complete the proposed transaction; Parker’s business experiencing disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, business partners or governmental entities; the possibility that the expected synergies and value creation from the proposed transaction will not be realized or will not be realized within the expected time period; the parties being unable to successfully implement integration strategies; and significant transaction costs related to the proposed transaction. Readers should consider these forward-looking statements in light of risk factors discussed in Parker’s Annual Report on Form 10-K for the fiscal year ended
|Aidan Gormley, Director, Global Communications and Branding||216/896-3258|
|Financial Analysts –|
|Robin J. Davenport, Vice President, Corporate Finance||216/896-2265|
Source: Parker-Hannifin Corporation