Buyout giant KKR in £2.5bn deal for engineer

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KOHlBERG Kravis Roberts & Co, the US private equity giant famous for one of the largest leveraged buyouts in history, is to acquire two manufacturing sites in West Yorkshire as part of a £2.5bn deal to buy industrial machinery maker Gardner Denver.

KKR’s offer of $76 per share is at a premium of 3 per cent to Gardner Denver’s closing price on the New York Stock Exchange. It is 39 per cent above what the stock traded at in late October when the company said it was exploring a sale.

Gardner Denver, which makes compressors, pumps and vacuum products for industrial uses, decided to put itself up for sale following months of pressure from activist investor Value Act Capital, which reported a 5 per cent stake in July 2012.

The Pennsylvania-based group has locations in 32 countries, including two factories in Bradford, which manufacture pump compressors and blowers for the transportation industry.

Pete Stavros, a member of KKR and head of the firm’s industrials investment team, said: “Gardner Denver is an outstanding business with a rich heritage of manufacturing excellence, innovation and quality that spans well over 100 years.

“The company has an impressive group of talented and dedicated employees, and we look forward to working closely with them to drive future growth and value.

“The long-term future of Gardner Denver is bright.”

Michael Larsen, chief executive at Gardner Denver, said: “Gardner Denver will benefit from KKR’s track record of execution as the company continues to pursue its strategy focused on driving organic growth, particularly in under-served markets, and building new revenue streams in the aftermarket and through the introduction of innovative customer-centric solutions across its businesses.”

A spokesman for Gardner Denver did not respond to calls for comment.

KKR earned its place in history with the $25bn takeover of the RJR Nabisco tobacco and food conglomerate in 1989. The deal was twice as large of any other previous corporate transaction.

It was long considered the pre-eminent example of corporate greed and immortalised in the book Barbarians at the Gate.