Parker Hannifin To Acquire Lord Corp. For About $3.675 Bln In Cash - Quick Facts

(RTTNews) - Parker Hannifin Corp. (PH), the global leader in motion and control technologies, agreed Monday to acquire privately-held Lord Corp. for about $3.675 billion in cash. The transaction has been approved by the Board of Directors of each company and is subject to customary closing conditions, including receipt of applicable regulatory approvals.

The acquisition will enable Parker to add about $1.1 billion in annual sales to engineered materials with complementary products, strengthening its materials science capabilities, electrification and aerospace product offerings.

Parker expects to realize about $125 million in pre-tax run-rate cost synergies by full-year 2023. The cumulative cost to achieve these synergies is expected to be approximately $80 million.

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.

Upon closing of the transaction, Lord will be combined with Parker's Engineered Materials Group.

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.

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.