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KKR Transaction Maximizes Value and Execution Certainty for CIRCOR Shareholders
KKR, a leading global investment firm, today reaffirmed its affiliates' (such affiliates referred to herein as "KKR") intention to acquire CIRCOR International ("CIRCOR" or the "Company") and issued the following statement:
KKR is confident that its transaction to acquire CIRCOR maximizes shareholder value while minimizing regulatory, market, and industry risks. In sharp contrast to Arcline Investment Management, whose funds own a direct competitor of CIRCOR called Fairbanks Morse Defense ("FMD"), KKR believes its transaction presents no risk of antitrust delays or failure to close at the expense of CIRCOR shareholders given the lack of competitive overlap. This is particularly important in the current regulatory climate given heightened scrutiny around consolidation between competing suppliers of the Defense Industrial Base. Any transaction delays and uncertainty associated with antitrust considerations can come at a material cost to CIRCOR shareholders, including significant time value of money impact.
The KKR transaction is expected to close in the fourth quarter of 2023. Any reasonable antitrust analysis indicates that a transaction with funds that control a direct competitor to CIRCOR, even if it receives regulatory approval which is by no means certain, would close no sooner than the second half of 2024. KKR and CIRCOR submitted their Hart-Scott-Rodino filings on June 20, 2023, and all other regulatory filings have been moving forward smoothly.
KKR has also agreed to eliminate third party financing risk from its transaction by providing a full equity backstop of the transaction — something that few other buyers could offer and of significant value to CIRCOR's shareholders particularly in today's uncertain financing markets. Arcline's proposal, on the other hand, is contingent on obtaining debt financing, which creates meaningful uncertainty for CIRCOR's shareholders.
KKR has a long history of making successful investments in the industrial and aerospace and defense sectors globally. KKR's support and resources established over its 47-year history will help CIRCOR drive further growth by expanding its presence in attractive flow control markets through new product development and aftermarket expansion, as well as supporting further investments into CIRCOR's factories. KKR will also support CIRCOR in providing all employees with the opportunity to participate in the benefits of ownership in the Company, as it has for over a decade in prior investments such as Capsugel, Capital Safety, C.H.I. Overhead Doors, Ingersoll Rand and Minnesota Rubber & Plastics.
