Officials optimistic about potential Gardner Denver deal

Gardner Denver in Quincy, Ill. (H-W File Photo)
Posted: Dec. 11, 2012 12:46 pm Updated: Jan. 1, 2013 5:59 pm
Gardner Denver in Quincy, Ill. (H-W File Photo)

Herald-Whig Staff Writer

Both Phil Conover of the Great River Economic Development Foundation and Quincy Mayor John Spring feel the rumored sale of Gardner Denver Inc. to SBX Corp. of Charlotte, N.C., could be a positive development for the West-Central Illinois economy.

Business news outlets worldwide began touting the negotiations between Gardner Denver and SBX late Monday, a potential deal some experts say could be finalized by the end of the calendar month.

"My initial reaction is that SBX would be a good strategic fit," said Conover, interim president of GREDF.

Conover said SBX, a Fortune 500 multi-industry manufacturing firm, has been moving more into power and energy flow, but does not have a branch that deals with the production of compressors needed for such operations. Conover said the acquisition of a company like Gardner Denver, which deals in those kind of compressors, would "fit into the SBX strategy."

Most importantly from a local standpoint, Conover said he would envision a company like SBX maintaining the Quincy plant "and its excellent work force," rather than trying to develop a similar site at another location.

"I'm hopeful," said Conover about such a scenario.

Spring is also optimistic about what was unfolding this week.

"I tend to agree with Phil," the mayor said. "This has potential. This could be a positive."

The Quincy plant employs about 300 people. About five years ago, it employed about 450.

Reuters is reporting that a merger could create an industrial machinery conglomerate with a market value of more than $7 billion. With a market value of about $3.5 billion, SPX is of similar size to Gardner Denver, which has a market capitalization of $3.35 billion. SPX could use both cash and its own shares to pay for a deal and has reached out to banks for financing to support the cash element of its offer, a source told Reuters.

"SBX has long been a thought in people's minds (as a buyer of Gardner Denver), according to my sources," Conover said

The Wall Street Journal is reporting that several private-equity firms that had put in offers for Gardner Denver, whose roots in Quincy go back to the late 1800s, last week have been told to wait on the sidelines as the two companies negotiate.

"If the negotiations with SBX would fall through, Gardner Denver would go back on the bidding block for the private-equity firms," Conover said.

The Journal is reporting that offers from private-equity firms are in the low- to mid-$70s per share in cash, whereas SPX has offered several dollars more per share, likely through a mix of cash and stock, to combine with Gardner Denver.

Neither SBX or Gardner Denver officials are commenting publicly about the reported negotiations
Spring said he was in email contact Tuesday with Michael Larsen, Gardner Denver chief executive officer and president. Spring said he could not divulge the content of that correspondence, only to say that Larsen's stance is "not to comment on speculation."

Gardner Denver announced in October that it was pursuing strategic alternatives, including a sale of the company. Goldman Sachs Group Inc. is an adviser in a potential sale.
According to October reports by Bloomberg News, at least five companies — TPG Capital, Onex Corp., KKR & Co., Blackstone Group LP and Bain Capital LLC — were considering offers for Gardner Denver.

The Herald-Whig reported then that talks of a sale or merger began July 28 after ValueAct Capital recommended a sale to boost shareholder profits. ValueAct made its request in a 13D/A document filed with the Securities and Exchange Commission.

The documents are required when investors whose holdings exceed 5 percent of company ownership express their intentions.

Gardner Denver announced in August that it would shut down some of its European manufacturing facilities and trim its work force to reduce costs. That move came after the company reported a 36 percent drop in orders for the company's engineered products division — mostly petroleum and industrial pumps — during the second quarter.

SPX's business segments serve developing and emerging end markets, such as global infrastructure, process equipment, and diagnostic tool industries. The firm has operations in more than 35 countries around the world. Their products include pumps, valves, and other fluid-handling devices; diagnostic tools, fare-collection, and cable/pipe locators; cooling, heating, and ventilation equipment; and compactors, power systems, broadcast antenna systems, dairy dryers, aerospace components, and pressure vessel closures.

Gardner Denver is a worldwide manufacturer of highly engineered products, including compressors, liquid ring pumps and blowers that are used in industrial, medical, petroleum, transportation and environmental fields. In 2011, the company had revenue of nearly $2.4 billion, up 25 percent from 2010 revenue.

In Quincy, Gardner Denver manufactures drilling and mud pump products used primarily in the petroleum industry. The company has been restructuring its global operations in recent years. The corporate manufacturing services department was eliminated from Quincy operations in September 2008. Gardner Denver began moving its global corporate headquarters to Wayne, Pa., in September 2010.


Editor's note: This story has been updated since its original posting.