Gardner Denver seeks other offers after SPX Corp. withdraws from talks

Reuters reported that SPX dropped plans to offer $85 per share for Gardner Denver stock in a $4.2 billion deal after SPX could not find the loan terms it was seeking. (H-W File Photo)
Posted: Dec. 27, 2012 5:14 pm Updated: Jan. 17, 2013 5:25 pm

Herald-Whig Senior Writer

Gardner Denver Inc. officials have asked to meet with private equity firms interested in a possible sale or merger after SPX Corp., pulled out of acquisition talks.

Reuters reported that SPX dropped plans to offer $85 per share for Gardner Denver stock in a $4.2 billion deal after SPX could not find the loan terms it was seeking.

Nicholas Heymann, an analyst with William Blair & Co., told Bloomberg News that SPX investors were relieved that the deal fell through. Heymann said Gardner Denver was too big for SPX to buy, and that investors would prefer SPX to use proceeds of about $1 billion from the sale of its vehicle-servicing unit, which was completed this month, to repurchase shares.

"It's the idea of fishing for too big a fish in a dinghy," Heymann said.

Gardner Denver sank 11 percent to $67.40 after Reuters reported the collapse of the SPX talks, its biggest drop since Aug. 8, 2011. It was trading at $68.21 per share, or 36 cents higher than the Wednesday close, during afternoon trading Thursday. That would give the company a value of about $3.35 billion.

Analysts and Gardner Denver officials declined comment Thursday, saying there is no offer on which to focus.

"We knew something about what was being looked at by SPX, but we don't have any details about what Gardner Denver is considering now," said a financial services analyst who did not want to be identified.

Gardner Denver said in an emailed statement to Bloomberg that it will continue to work with its adviser, Goldman Sachs Group Inc., to seek strategic alternatives and improve shareholder value.

"These alternatives could include, among others, enhancing the company's existing strategic plan or a possible sale or merger," the company said.

It has been a tumultuous year for the company, with a 52-week high of $82.26 per share and a 52-week low of $45.54.

A person familiar with the matter told Bloomberg that Gardner Denver board members were also reluctant about the amount of SPX stock being offered. SPX shares had tumbled 8.6 percent since Nov. 6, when Bloomberg News reported the company's interest.

Gardner Denver employs about 300 people in Quincy, manufacturing industrial machines such as pumps and machines used in the oil sector and for other industrial purposes.

Talks of a sale or merger began July 28 after ValueAct Capital recommended a sale to boost shareholder profits. ValueAct made its suggestion to the board of directors after what it called the "surprising resignation" of Gardner Denver CEO Barry Pennypacker on July 16.

Chief Financial Officer Michael Larsen has been serving as interim CEO since Pennypacker's departure.

Goldman Sachs has been the company's financial adviser and was receiving offers on Gardner Denver.

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.

The company's stock was considered a bargain when it was selling in the $55 range and market analysts predicted a purchase offer could come in around $70 per share. That led to a surge in GDI stock prices during the past 45 days and a high of $76 last week.