Crane Co, a U.S.-based industrial conglomerate that supplies payment and merchandising technology to the gaming industry, says it has agreed to a 100-percent buyout of Crane and Co Inc – also known as Crane Currency – for US$800 million on a “cash-free and debt-free basis”.
According to a Tuesday press release issued by the suitor firm, Crane Currency was founded more than 200 years ago, and is a leading supplier of micro-optic technology, which can be used for security purposes for specialised products such as printed banknotes. According to the announcement, Crane Currency is also a supplier of “secure and highly-engineered banknotes for central banks all over the world”.
The vendors of the 100-percent equity interest in the target firm are, respectively, private equity firm Lindsay Goldberg LLC, members of the “Crane family”, and other shareholders, according to the release.
The purchase price represents approximately 8.5 times Crane Currency’s estimated 2017 adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$94 million, said the release. The target is expected to have generated sales of approximately US$500 million in 2017, added the press release.
Max Mitchell, president and chief executive of Crane Co, said in a prepared statement that the acquisition was a “logical extension of our expanding presence in the currency and payment markets”.
He added: “Our combined businesses will be able to offer end-to-end currency and security solutions, from substrate manufacturing and banknote design and printing to micro-optics and banknote validation.”
The suitor firm said that – excluding any special items on its balance sheet – the acquisition was expected to be accretive to group earnings per share (EPS) by a figure of US$0.15 in the first full year post-closing, increasing to approximately US$1.00 by 2021.
“We believe it provides us a path to greater than 10-percent adjusted EPS growth annually for the next several years,” stated Mr Mitchell.
The purchase is subject to regulatory approvals and closing conditions. Crane Co intends to finance the acquisition through a combination of cash on hand and additional debt.
“Commitments are in place to cover 100 percent of the financing needs in order to facilitate the closing of the transaction, which is expected to take place early in the first quarter of 2018,” said the suitor.
A Crane Co filing to Nasdaq on Tuesday said it had a commitment from Wells Fargo Bank, National Association; and Wells Fargo Securities LLC under which the banking group would provide US$350-million of debt financing for the acquisition.
Crane Co also gave in its Tuesday press statement – ahead of its fourth-quarter earnings announcement due in January – updated guidance on 2017 earnings.
On a U.S. generally accepted accounting principles basis, it expected 2017 earnings of US$4.38 to US$4.48 per diluted share, compared to its prior guidance in the range of US$4.41 to US$4.51 per diluted share. It said the reduced share earnings estimate was due to “incremental transaction related costs anticipated for the fourth quarter of 2017”.
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”We do not believe that reopening the advance notice nomination deadline [for board directors] is appropriate or justified”
Daniel Boone Wayson
Chairman of the Wynn Resorts board of directors