CHARLOTTE, NC — SPX FLOW, a provider of process solutions for the nutrition, health and industrial markets, announced Dec. 13 it entered into an agreement to be acquired by an affiliate of Lone Star Funds in an all-cash transaction valued at $3.8 billion, including the assumption of debt.
The purchase price represents a premium of nearly 40% over SPX FLOW's closing stock price on July 16, 2021, the last trading day prior to the publication of an article in the July 19, 2021, edition of The Wall Street Journal stating that the company received an unsolicited purchase offer.
"We are pleased to have reached this agreement with Lone Star, which is the result of a comprehensive review of alternatives, including a robust sale process, conducted by our Board in consultation with independent advisors," said Robert F. Hull, Jr., Chairman of the SPX FLOW Board of Directors. "As part of the process, SPX FLOW held discussions with multiple strategic and financial parties and evaluated the transaction against the Company's standalone prospects, performance and outlook. We believe this transaction is the right path forward and achieves our goal of maximizing value for SPX FLOW shareholders."
"SPX FLOW has transformed its business and made important progress executing against our strategic plans, and we believe this transaction with Lone Star is an exciting culmination of those efforts for our shareholders," said Marc Michael, SPX FLOW President and CEO. "In Lone Star, we have a partner that brings additional perspective and expertise to support the continued implementation of our strategic initiatives as we deliver reliable outcomes for customers and provide them the high-quality products and services they expect from us. This transaction is a testament to the achievements of our employees, and I would like to thank them for all they do to make SPX FLOW the premier process solutions company. We look forward to working with Lone Star to complete the transaction and delivering significant, immediate and certain value to our shareholders."
"We are excited about the opportunity to partner with SPX FLOW," said Donald Quintin, President, Lone Star Opportunity Funds. "This acquisition is consistent with Lone Star's strategy to invest in businesses with substantial runway for growth. We have great respect for SPX FLOW's talented employees and their commitment to innovation and serving customers. We look forward to working with Marc and the entire team to help advance SPX FLOW's strategy and capture the opportunities ahead."
The transaction was unanimously approved by the SPX FLOW Board of Directors and is expected to close in H1 2022, subject to receipt of certain regulatory approvals, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, as well as SPX FLOW shareholder approval and other customary closing conditions. The transaction is not subject to a financing condition.
Upon completion of the transaction, SPX FLOW will become a privately-held company and SPX FLOW's shares will no longer trade on The New York Stock Exchange.
As a condition to the transaction, SPX FLOW has agreed to suspend payment of its quarterly dividend, effective immediately.
Morgan Stanley & Co. LLC is serving as exclusive financial advisor to SPX FLOW and Winston & Strawn LLP is serving as its legal advisor. Citi, RBC Capital Markets, LLC, and BofA Securities Inc. are serving as financial advisors to Lone Star, and Gibson, Dunn & Crutcher LLP and Kirkland & Ellis LLP are serving as legal advisors.
Based in Charlotte, N.C., SPX FLOW improves the world through innovative and sustainable solutions. The company's product offering is concentrated in process technologies that perform mixing, blending, fluid handling, separation, thermal heat transfer and other activities that are integral to processes performed across a wide variety of nutrition, health and precision solutions markets. SPX FLOW had approximately $1.4 billion in 2020 annual revenues and has operations in more than 30 countries and sales in more than 140 countries.
Lone Star, founded by John Grayken, is a private equity firm advising funds that invest globally in real estate, equity, credit and other financial assets. Since the establishment of its first fund in 1995, Lone Star has organized 21 private equity funds with aggregate capital commitments totaling approximately $85 billion. The firm organizes its funds in three series: the Commercial Real Estate Fund series; the Opportunity Fund series; and the U.S. Residential Mortgage Fund series. Lone Star invests on behalf of its limited partners, which include institutional investors such as pension funds and sovereign wealth funds, as well as foundations and endowments that support medical research, higher education, and other philanthropic causes.