FULTON — Fulton-based pump and valve maker Colfax Corp. said Monday it will buy Charter International PLC, which owns two engineering businesses, in a cash-and-stock deal valued at $2.4 billion.
Colfax said it has agreed to pay about $14.45 per share, for Dublin-based Charter, Europe’s biggest welding equipment maker. The offer includes cash and a portion of Colfax shares for each share of Charter. The offer trumps one made by Melrose Plc for Charter.
Colfax’ offer, recommended by Charter, is 48 percent higher than the stock’s closing price on June 28, the day prior to Melrose’s preliminary proposal.
Colfax and Melrose have been battling for control of Charter as they seek to add businesses such as air- and gas-handling equipment. Colfax Chief Executive Officer Clay H. Kiefaber said the purchase will complement the company’s fluid-handling equipment range, and also speed expansion into emerging markets including Brazil, Russia, India and China. Charter is registered in Jersey and has its headquarters in Dublin.
“This is a business with great brands and great technology,” Kiefaber said in an interview.
Charter’s Howden division focuses on air and gas handling, and its ESAB business focuses on welding and cutting.
Colfax also said the deal provides exposure to emerging markets and offers an additional growth platform in the fragmented welding and cutting industry.
Colfax said Charter’s board has unanimously approved the deal. Colfax will finance it with a combination of cash, new bank debt and new equity.
It has received $2.1 billion in firm commitments for the bank debt from Deutsche Bank and HSBC.
Charter shareholders can vary the percentage of stock or cash they receive for the shares, the two companies said. Funds that compare themselves to benchmarks such as the FTSE 350 index may not want to hold U.S. shares, said David Larkam, an analyst at Arden Partners who has a “buy” recommendation on Charter.
“Short-term, it’s the best offer on the table,” Larkam said. “Long-term, I don’t know how many people will be able to hold paper in U.S. companies.”
Colfax, which is seeking to buy a company five times its size in sales, will fund the acquisition through an equity issue, new debt facilities and existing cash. It expects credit ratings of at least BB- after the transaction, Senior Vice President Dan Pryor said in an interview. Ratings services currently don’t rate its debt, he said.