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On Thursday, industrial conglomerate Crane (NYSE: CR ) announced it will pay $820 million to acquire 100% of the equity interests in MEI Conlux Holdings (U.S.), and its affiliate MEI Conlux Holdings (Japan), from private equity firms Bain Capital and Advantage Partners. Crane estimated the value of the purchase at 9.6 times the two firms' combined estimated 2012 earnings before interest, taxes, depreciation, and amortization of $85 million.
MEI -- as the companies are collectively referred to -- is a manufacturer of "unattended transaction systems" -- coin recognition systems, banknote validators, cash recyclers, and similar products -- and Crane intends to integrate it into Crane's existing Payment Solutions business. In a statement on the transaction, Crane noted that MEI has grown its sales at 13% annually, on average, from 2009 to 2012, while expanding its profit margins in tandem. The acquirer projects that MEI will be accretive to its earnings within a year after the acquisition, and that the combined pro forma EBITDA of the merged firm will be "approximately $575 million in 2012."
Crane expects the acquisition to close in the second quarter of 2012.
In related news, Crane updated its financial guidance for 2012, reaffirming a free cash flow projection of $150 million to $180 million, and advising that GAAP earnings per share should be "in the lower half of" $3.75-$3.85, not including "special items." In 2013, Crane predicts core sales growth of between 2% and 4%, and earnings per share of $4.05 to $4.20 -- again, not including special items.
Shares of Crane opened 1.4% lower today after the announcement but have since rebounded to gain 2.8%, currently trading at $46.24.