What happened
Circor International (CIR) managed to solicit a second bidder for the company, and investors stand to benefit from the interest. Shares of Circor were up 17% for the week, according to data provided by S&P Global Market Intelligence, as the aerospace component manufacturer plots out its future.
So what
Circor, a maker of pumps, valves, and other flow-control products for the aerospace and defense, chemical manufacturers, and refineries industries, in early June agreed to be acquired by KKR (KKR 0.71%) for $1.6 billion. That works out to $49 per share, or about 50% above where the stock was trading prior to the announcement.
Terms of the deal gave Circor's board the right to terminate the agreement should a better offer come along. A potential better deal did arise this week, when Arcline Investment submitted a proposal to acquire Circor for $51 per share.
KKR in response reaffirmed its commitment to acquiring Circor, and on Thursday sweetened its offer to $56 per share.
Now what
Although the KKR offer isn't as high as what Arcline is willing to pay, it does have its advantages. Arcline owns Fairbanks Morse Defense, which KKR has argued competes directly with Circor on the manufacture of certain valves used in U.S. Navy submarines.
"Consolidation of two key suppliers for the U.S. Navy's highest priority programs, precisely at a moment when the Department of Defense seeks to ramp up their production while controlling costs, is highly likely to draw exceptional scrutiny," KKR said in a statement.
Arcline obviously disagrees, but if nothing else it appears there would be a long, drawn-out path to approval for the bid.
Regardless, the Arcline interest if nothing else generated a nice sweetener for Circor shareholders.
