Crane Is Ready to Take $45-Share Offer to Circor Holders
(Bloomberg) -- Crane Co. is ramping up pressure on rival Circor International Inc. by taking its $45-a-share takeover offer directly to the industrial product manufacturer’s shareholders.
Crane has commenced an unsolicited, all-cash tender offer for the flow control equipment maker’s outstanding shares, Circor said in a statement Monday, confirming an earlier Bloomberg News report.
"The Circor board of directors will carefully review and evaluate Crane’s tender offer to determine the course of action that it believes is in the best interests of Circor and its shareholders," the company said. The board intends to make a recommendation to shareholders on the offer within 10 business days.
The tender offer, which would crystallize Crane’s unrequited overtures into a formal hostile takeover proposal, is aimed at forcing Circor’s management to the negotiating table to avoid facing the prospect of a shareholder referendum on the deal.
"This cash tender offer provides Circor shareholders the opportunity to send a clear message to the Circor board," Crane Chief Executive Officer Max Mitchell said in a statement Monday. "Circor shareholders have endured five years of underperformance and a series of value-destroying capital allocation decisions by current management."
The offer represents about a 50% premium above Circor’s share price on May 20, the day before Bloomberg first reported Crane’s interest in acquiring it.
Circor rose less than 1 percent to $45.02 at 12:55 p.m. in New York on Monday, valuing the Burlington, Massachusetts-based company at $896 million.
Crane’s largest customers by revenue include Boeing Co. and Airbus SE, while Circor’s include Lockheed Martin Corp. and Exxon Mobil Corp.
The push comes almost two weeks after Mitchell criticized Circor’s board for refusing to engage in merger talks despite a series of offers to do so. In a letter dated June 4, Mitchell said Circor’s board had “provided no significant rationale for its rejection,” calling it a “disservice to Circor shareholders.”
In the same letter, Mitchell said Crane was willing to improve the terms of its $45-a-share offer should Circor decide to engage.
Mario Gabelli, chairman of Gamco Investors Inc., which owns 15.2% of Circor’s stock and is the largest investor, has also criticized the board’s failure to engage with Stamford, Connecticut-based Crane.
In an interview last month, Gabelli said “there is no way you could talk about this as proper governance.”
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