Gardner Denver seeking buyer among equity firms

Posted: Jan. 9, 2013 12:34 pm Updated: Jan. 30, 2013 1:15 pm

Herald-Whig Senior Writer

Gardner Denver Inc. is expected to meet next week with Advent International Corp. and KKR & Co., as well as other equity firms considering a purchase of the industrial equipment manufacturer.

"I would actually be surprised if something wasn't announced within the next month," Joshua Pokrzywinski, an analyst with MKM Partner LLC, told Bloomberg News.

Gardner Denver recently broke off talks with SPX Corp., which had offered nearly $85 per share of GDI stock. SPX could not get the loan terms it was seeking, but analysts said lenders also may have felt the offer was too high.

Pokzywinski believes that Gardner Denver may be willing to consider a bid of $75 a share or a little more.

"Ultimately a deal is highly likely here," Pokrzywinski told Bloomberg News. "Gardner Denver would be amenable to something at or slightly above $75. That would get it done."

In addition to KKR and Advent, a team comprised of Onex Corp. and TPG Capital want to bid on Gardner Denver.

Gardner Denver stock sank 11 percent in trading on the New York Stock Exchange Dec. 21 after reports that the SPX deal collapsed. Gardner Denver said then that it would continue to work with its adviser, Goldman Sachs Group Inc., to pursue options including a sale.

Gardner Denver stock opened at $68.65 Wednesday.

Gardner Denver has attracted attention from investment firms because of the company's compressor business. Prices and profits for compressors and manufacturing equipment are expected to rise greatly during the next few years, according to industry experts.

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 was named CEO since Pennypacker's departure.

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 that rose as high as $76 in late December before falling back to $68.80 in trading Wednesday.