What happened
Private equity titan KKR (KKR +0.31%) has agreed to acquire aerospace component manufacturer Circor International (CIR +0.00%) for $1.6 billion, including debt. That's a significant premium to where the market had valued Circor, and the company's stock took off as a result.
Shares of Circor were up 51% for the week as of midday Thursday, according to data provided by S&P Global Market Intelligence.
So what
Circor is a maker of pumps, valves, and other flow-control products for a range of applications including aerospace and defense, chemical manufacturers, and refineries.
The company has been in a state of flux for a while now. In March 2022, it announced it was pursuing strategic alternatives after receiving inquiries, but for more than a year there was no sale announcement.
That all changed June 5, when KKR agreed to acquire Circor for $49 per share in cash. That's a premium of 55% to Circor's closing price on June 2, and sent shares rallying skyward.
Circor chairman Helmuth Ludwig called the deal "the successful culmination of a strategic review process" that is in the best interest of shareholders.
"As part of our comprehensive strategic review ... we engaged in extensive dialogue with a number of parties that expressed interest in acquiring all or parts of the company," Ludwig said. "We believe that this transaction and the immediate cash value it will provide to Circor's stockholders best achieves the board's goal of unlocking the significant incremental value within Circor for its stockholders."
NYSE: CIR
Key Data Points
Now what
Terms of the deal give Circor's board the right to terminate the agreement should a better offer come along, but as Ludwig notes Circor spent a lot of time considering its options, and presumably talking to other potential suitors, before announcing its deal.
There's a high probability that this deal will close, as expected, before year-end. Long-term holders are in for a nice payday, but given the stock is already near the deal price there is little reason to buy in right now.
