Circor International said on Tuesday it had accepted investment firm KKR’s revised buyout offer of $1.7 billion, including debt, rebuffing a rival bid from an unnamed third party.
Shares of the industrial machinery maker hit a more than five-year high of $51.87 in early trading, slightly above KKR’s revised offer price of $51 per share.
KKR sweetened its offer after Circor received an unsolicited buyout proposal for $52.65 per share in cash, Circor said. KKR has also agreed to provide a full equity backstop to implement the merger.
An equity backstop is when a PE firm or a strategic corporate buyer decides to fund a deal using only equity, rather than debt.
Circor board deemed KKR’s offer of $51 per share as superior, citing greater funding certainty and a clearer and faster path to receiving antitrust approvals.
KKR, which had earlier proposed to take Circor private for $49 per share, has also agreed to pay the company $125 million in case the merger fails.
The deal represents an equity value of nearly $1.04 billion, according to Reuters calculations. It is expected to close in the fourth quarter of this year.
Circor said earlier this month it had entered into a $1.6 billion take-private deal with KKR to expand its presence in the flow-control space.
Flow-control products help manage and control liquids and gases using equipment or services such as pumps, valves, compressors and meters.