* First-round bids due Nov. 5-sources
* TPG, Onex, KKR, Blackstone, Bain among those
interested-sources
* Gardner Denver shares close up 20.5 percent
(Adds analyst comment, background on the company, updates deal
value)
By Greg Roumeliotis and Soyoung Kim
NEW YORK, Oct 25 (Reuters) – Industrial machinery maker
Gardner Denver Inc is exploring a sale and has drawn
initial interest from several major private equity firms,
according to people familiar with the matter, in a deal that
would top $3.5 billion.
Gardner Denver’s bankers at Goldman Sachs Group Inc
have started to reach out to potential buyers in recent weeks
and have asked for first-round bids by Nov. 5, the people said
on Thursday. The company may still decide not to sell after it
completes the process, they added.
TPG Capital LP, Onex Corp, KKR & Co LP,
Blackstone Group LP and Bain Capital LLC are among the
buyout firms considering offers, the people said. TPG and Onex
are expected to bid jointly, two of the people added.
Gardner Denver, Goldman Sachs, Bain, TPG, Onex and KKR did
not immediately respond to requests for comment. Blackstone
declined to comment.
Shares of Gardner Denver surged to a six-month high on
Thursday and closed up 20.5 percent at $66, representing a
market value of about $3.2 billion. The company had long-term
debt of some $400 million as of the end of June.
The move to solicit offers follows months of pressure from
activist investor ValueAct Capital LLC, which has been calling
for a sale of the company after acquiring a roughly 5 percent
stake. ValueAct did not respond to a request for comment.
Gardner Denver, which makes compressors, pumps and vacuum
products for industrial uses, hired Goldman Sachs initially as a
defense adviser after ValueAct in July urged the company’s board
to pursue a sale.
The move followed the sudden resignation of Chief Executive
Barry Pennypacker earlier that month and his interim replacement
by Chief Financial Officer Michael Larsen.
“We believe that buyers are unlikely to pay nine times
enterprise value to earnings before interest, tax depreciation
and amortization (EBITDA) or more, with looming EBITDA declines
in 2013, and at eight times to nine times our new estimate
implies a $61-$69 stock,” BB&T; Capital Markets analysts wrote in
a note last week.
“In our view, this is not likely enough to excite a board
that saw the stock exceed $90 in summer 2011 and believes the
company can unlock considerable value in the out years through
restructuring and other initiatives,” they added.
Gardner Denver has suffered as a result of its exposure,
through its pumps business, to oil and gas prices.
Lower demand for petroleum and industrial pumps pressured
the company’s engineered products division, which reported a 36
percent drop in orders in the second quarter. The division
accounts for 54 percent of Gardner Denver’s total revenue.
In August it said it would shut some of its European
manufacturing facilities and cut jobs as part of a restructuring
plan aimed at cutting costs and expanding margins.
(Reporting by Greg Roumeliotis and Soyoung Kim in New York;
Editing by Leslie Adler)
