Teledyne Scores Biggest Deal Ever With $7.36 Billion Flir Buyout

(Bloomberg) -- Teledyne Technologies Inc. agreed to buy Flir Systems Inc. for $7.36 billion, making its biggest acquisition ever to bolster a lineup of sensors and imaging systems used in aerospace and defense.

Flir’s shares, which tumbled last year, jumped on Monday by the most since 2001.

The companies would have combined 2020 revenue of roughly $5 billion on a pro forma basis, according to a presentation for analysts. Flir’s imaging products in the battlefield and commercial markets would add to Teledyne’s lineup of space and aircraft systems.

With demand on the rise, Teledyne has been targeting acquisitions. The company, which was valued at $14.5 billion as of Dec. 31, said in October that it had a strong balance sheet and a “healthy” pipeline of buyout targets that would help it increase cash flow over coming years. It paused the acquisition of France’s Photonis in September, citing conditions proposed by the French government.

The deal calls for Flir investors to receive $28 a share in cash and 0.0718 Teledyne share for each Flir share held. That values the deal at about $56 a share, based on average trading prices over the past five days, according to a statement. The purchase price is a 28% premium to Flir’s last closing price of $43.83, on Dec. 31.

While the manufacturers of sensors, cameras and sensor systems have similar business models, there’s little overlap because their technologies involve different wavelengths, Teledyne Executive Chairman Robert Mehrabian said in the statement.

Still, Truist analyst Michael Ciarmoli said he expected the deal could come under regulatory scrutiny because of the new company’s presence in the markets for infrared and digital imaging.

Flir surged 19% to $52.06 at 12:56 p.m. in New York after climbing as much as 24%, the most intraday since September 2001. Teledyne fell 8.6% to $358.38 Monday, the most intraday since March. Flir dropped 16% last year, while Teledyne rose 13%.

Top Deal

Teledyne said the Flir deal, which it valued at about $8 billion, would add to earnings immediately when excluding transaction costs and the amortization of intangible assets. A representative for the Thousand Oaks, California-based company said the deal was Teledyne’s largest ever.

Flir products are used in defense, heavy industry and government. The 42-year-old company is best known for airborne intelligence, reconnaissance and targeting systems on war planes.

Flir been evolving toward a range of decision-support activities, ranging from battlefield detection to helping first responders identify missing persons at sea, or monitoring factory equipment. It had just over 4,000 employees, its chief executive, Jim Cannon, said in a December presentation. Although the company is based in Arlington, Virginia, it still lists the Oregon address of its former headquarters for some securities filings.

The companies expect the purchase to close in the middle of this year, subject to regulatory and shareholder approvals and other customary conditions.

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