Diversified manufacturer Crane Co. (CR: Quote) agreed Thursday to acquire MEI Conlux Holdings (U.S.), Inc. and its affiliate MEI Conlux Holdings (Japan), Inc. from private equity firms Bain Capital and Advantage Partners for about $820 million on a cash free and debt free basis. The deal is expected to closed in the second quarter of 2013.
The company also reaffirmed its earnings guidance for the full-year 2012 and provided initial forecast for the full-year 2013.
“This acquisition is consistent with our strategy of niche market leadership. MEI is an outstanding business and a leader in the payment solutions industry, with a solid product portfolio, excellent technology and sophisticated hardware and software. MEI materially strengthens our existing Payment Solutions business, which we have grown through three acquisitions beginning in 2006,” Crane President and CEO Eric Fast said it a statement.
Malvern, Pennsylvania-based MEI is a leading provider of payment solutions for unattended transaction systems, serves customers in the transportation, gaming, retail, service payment and vending markets. It generated annual sales of about $400 million in 2012.
MEI acquired Conlux, the Japanese leader in coin mechanisms and bill validators, in 2003, and MEI was then acquired by Advantage Partners and Bain Capital in 2006.
Following the completion of the deal, Stamford, Connecticut-based Crane will include MEI under its payment solutions business, but MEI will operate independently under their existing management structures.
Crane’s payment solutions business was formed after it acquired acquired NRI, a niche European coin validation and dispensing business, in 1985 as part of the acquisition of UniDynamics Corp. It also invested another $220 million to make three other acquisitions to broadened the scope and scale of the business.
Meanwhile, Michael Hayes, President of MEI, will become president of the combined payment solutions businesses, and will report to Max Mitchell, Executive Vice President and COO of Crane.
Kurt Gallo, President of Crane Payment Solutions, will assume the COO role of the combined businesses, and will report to Hayes. Kiyoaki Takeda will continue as President of MEI Conlux Holdings (Japan). Brad Ellis, President of Crane’s Vending Solutions business will continue to report directly to Mitchell.
“Excluding inventory step-up and one-time transaction costs, we expect MEI to be accretive to earnings within the first year of acquisition by about $0.25 per share, including $0.05 in synergies. We expect synergies to grow to $25 million annually on a pre-tax basis, or $0.30 per share in 2015,” Fast added.
Looking ahead to fiscal 2012, the company anticipates combined sales of MEI and Crane Payment Solutions to be about $575 million on a proforma basis. Meanwhile, the company continues to expect adjusted earnings in the range of $3.75 to $3.85 per share, by now projects earnings in the lower half of the guidance range.
On average, analysts polled by Thomson Reuters expect the company to report earnings of $3.75 per share for fiscal 2012, on annual revenues of $2.61 billion. Analysts’ estimates typically exclude special items.
The company also said it still anticipates full-year 2012 free cash flow in a range of $150 million to $180 million.
For fiscal 2013, the company provided initial adjusted earnings forecast in the range of $4.05 to $4.20 per share, on projected year-over-year core sales growth (excluding acquisition and foreign exchange impacts) of between 2 and 4 percent.
Street is currently looking for full-year 2013 earnings of $4.13 per share on annual revenues of $2.72 billion.
CR closed Thursday’s regular trading session at $44.96, up $0.27 or 0.60% on a volume of 0.12 million shares.
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by RTT Staff Writer
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