CIRCOR International, Inc. (CIRCOR), one of the world’s leading providers of mission critical flow control products and services for the Industrial and Aerospace & Defense markets, announced that it has accepted a proposal from affiliates of investment funds managed by KKR to increase the price of its previously announced definitive merger agreement with CIRCOR from $49 to $51 per common share in cash, an increase of $2 per share. The all-cash transaction will be valued at $1.7 billion, including the assumption of debt.
In addition, KKR has agreed to provide a full equity backstop for the consummation of the merger. KKR has also agreed to a $125 million reverse termination fee payable to CIRCOR in certain circumstances where the transaction is terminated due to failure to obtain antitrust approvals, and to increase the existing customary reverse termination fee tied to closing obligations from $67 million to $100 million. The termination fee payable by CIRCOR to KKR in certain circumstances has been increased from $28 million to $42.75 million.
The amendment was executed after CIRCOR received an unsolicited proposal from a third party to acquire all of the issued and outstanding shares of CIRCOR common stock for $52.65 per share in cash. Despite the difference in price, the CIRCOR Board of Directors (the “Board”) unanimously concluded after extensive review that the KKR offer was superior because it offered more financing certainty and a clearer and faster path to receiving antitrust approvals.
“After carefully considering the unsolicited proposal, the Board, in consultation with its outside legal counsel and financial advisors, unanimously concluded that committing to the amended merger agreement with KKR was in the best interest of stockholders,” said CIRCOR Board Chair Helmuth Ludwig. “Our decision was based on multiple reinforcing factors, and we are excited that our negotiation has resulted in meaningfully greater value and certainty for CIRCOR stockholders.”
The Board unanimously supports the amended merger agreement with KKR and recommends that stockholders vote in favor of the amended KKR transaction. The transaction remains on track to close in the fourth quarter of 2023, and KKR and CIRCOR submitted their Hart-Scott-Rodino filings on June 20, 2023. The transaction remains subject to the receipt of approval from the Company’s stockholders and certain required regulatory approvals, as well as the satisfaction of other customary closing conditions.
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