July 1, 2019Ingersoll Rand’s Climate Segment to Be a Pure Play Global Leader in Climate Control Solutions for Buildings, Homes and Transportation
- Creates a leading industrial company with 2019E pro forma revenue of approximately $6.6 billion, with approximately 40% recurring services and aftermarket revenue, and adjusted EBITDA of approximately $1.6 billion1, including annualized cost synergies of approximately $250 million expected to be achieved by the end of year three following the close of transaction;
- Financially compelling combination expected to be tax-free valued at approximately $15 billion, including approximately$5.8 billion of stock and $1.9 billion in cash proceeds to ClimateCo; expected to generate significant value for both Ingersoll Randand Gardner Denver shareholders;
- Industrial company expected to be called Ingersoll Rand and trade under Ingersoll Rand’s existing ticker (NYSE: IR); will operate a diverse portfolio of iconic brands, including Gardner Denver; will be led by Gardner Denver’s CEO Vicente Reynal?and a management team from both companies; Board will be led by Gardner Denver Chairman Peter Stavros and include sevenGardner Denver and three Ingersoll Rand designated directors;
- Climate company to have pro forma revenue of ~$12.9 billion2and pro forma adjusted EBITDA of ~$2 billion3; with market-leading solutions, services and brands including Traneand Thermo King ; expected to have a new name and stock ticker; to be led by Michael W. Lamach , Ingersoll Rand’s current Chairman and CEO.
MILWAUKEE, Wis.& SWORDS,Ireland--(BUSINESS WIRE)--Gardner Denver Holdings, Inc.(NYSE:GDI) and Ingersoll-Rand plc (NYSE:IR) today announced that they have entered into a definitive agreement pursuant to which Ingersoll Rand will separate its Industrial segment (“Ingersoll Rand Industrial”) by way of a spin-off to Ingersoll Rand’s shareholders and then combine it with Gardner Denver, creating a global leader in mission-critical flow creation and industrial technologies (“IndustrialCo”). The HVAC and transport refrigeration assets of the current Ingersoll Rand will become a pure play global leader in climate control solutions for buildings, homes and transportation (“ClimateCo”).
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IndustrialCo will be composed of the entirety of Gardner Denver and Ingersoll Rand Industrial, including, subject to closing, Ingersoll Rand’s pending acquisition of Precision Flow Systems (“PFS”), which is expected to close by mid-2019. Gardner Denver’s CEO,Vicente Reynal, and executives from both companies, will lead IndustrialCo. IndustrialCo is expected to be called Ingersoll Rand and trade under Ingersoll Rand’s existing ticker (NYSE: IR). IndustrialCo will operate a diverse portfolio of iconic brands, including Gardner Denver.The Board of IndustrialCo will be led by Gardner Denver Chairman Peter Stavros.Michael W. Lamach, Ingersoll Rand’s Chairman and CEO, along with the current Ingersoll Rand executive team, will continue to lead ClimateCo, which is expected to be renamed.
Under the terms of the agreement, which has been unanimously approved by the Boards of Directors of Ingersoll Rand and Gardner Denver, at the time of close, ClimateCo will receive $1.9 billion in cash from Ingersoll Rand Industrial that will be funded by newly-issued debt assumed by Gardner Denver in the merger. Upon close of the transaction, existing Ingersoll Rand shareholders will receive 50.1% of the shares of IndustrialCo on a fully diluted basis, valued at approximately$5.8 billion4. Existing Gardner Denver shareholders will retain 49.9% of the shares of IndustrialCo on a fully diluted basis. The transaction is expected to be tax-free to Ingersoll Rand and Gardner Denver’s respective shareholders for U.S.federal income tax purposes.
“This transaction will create a global leader in mission-critical flow creation and industrial technologies, and accelerate both companies’ strategic priorities of deploying talent, driving growth, expanding margins through increased efficiencies and allocating capital effectively,” said Vicente Reynal. “Gardner Denver and Ingersoll Rand’s Industrial business have a combined history of over 300 years, and are both renowned for our commitment to operational excellence, innovation and quality.”
Vicente Reynal added, “Together we believe we will create meaningful value for shareholders through our increased scale and reach, unmatched portfolio of iconic brands, highly compelling service and aftermarket platform, exposure to diverse and attractive end markets and geographies and the expected realization of significant synergies. We look forward to combining the strengths and talents of our teams, and providing our customers with more comprehensive solutions and broader, industry-leading product, service and aftermarket offerings.”
“Ingersoll Rand has a long track record of top-tier financial performance,” said Mike Lamach. “This transaction presents a compelling opportunity to unlock significant value for all of our stakeholders through the formation of two global leaders in their respective sectors. In addition to owning one hundred percent of the ClimateCo, our shareholders will also benefit from majority ownership of IndustrialCo and the significant synergies expected to be unlocked as a result of the combination.”
Mike Lamach added, “As a pure play global leader in the climate control solutions markets, we will leverage our leading brands, outstanding sales and service channels and our proven business operating system to capitalize on global sustainability megatrends that play directly to our strengths: reducing energy demand and greenhouse gas emissions and improving efficiency in buildings, homes and transportation. With greater focus, more targeted investments and a simplified business model, we believe our new company will continue to drive above GDP growth and deliver value for shareholders, customers and employees.”
Following the close of the transaction, IndustrialCo intends to grant all employees of the combined company – who are not already equity eligible – with an equity award in IndustrialCo. The total amount of these awards will be approximately $150 million.
“In the same spirit in which we granted stock to our employees during Gardner Denver’s IPO, we feel strongly that all employees of IndustrialCo should be owners of their business,” said Peter Stavros. “We believe in fostering an ownership mentality, and that this drives motivation and engagement, something that has been clear in Gardner Denver’s strong performance. We look forward to offering this equity award to all eligible employees of the combined company and working together to drive the business forward to create value for all of our shareholders.”