January 11, 2010

3 Min Read
Hillenbrand to Acquire K-Tron International

Hillenbrand Inc. (NYSE: HI) and K-Tron International Inc. (NASDAQ-GS: KTII) have signed a definitive merger agreement providing for Hillenbrand’s acquisition of K-Tron for $150 per share in cash. This price represents a 32.1 percent premium over the closing price of K-Tron’s stock on January 8, 2010, and a 38.6 percent premium over the 20-day average closing stock price. The boards of directors of both companies have unanimously approved the merger agreement. The directors and officers of K-Tron holding approximately 10 percent of K-Tron’s outstanding common stock in the aggregate have agreed to vote their shares in favor of the transaction. The transaction will have an aggregate purchase price of approximately $435 million. Adjusted for K-Tron debt and cash on hand at October 3, 2009, the estimated net purchase price of the deal is approximately $390 million. The final net purchase price will be calculated based upon the K-Tron balance sheet at the date of close.

Following the completion of the transaction, expected to occur at the end of March 2010, K-Tron will operate as a wholly owned subsidiary of Hillenbrand. Kevin C. Bowen, who will be president of K-Tron’s Process Group, and Donald W. Melchiorre, who will be president of K-Tron’s Size Reduction Group, will continue to manage their respective businesses and report directly to Kenneth A. Camp, Hillenbrand’s president and chief executive officer. Lukas Guenthardt, senior vice president of K-Tron corporate development, will also report to Camp. Robert E. Wisniewski, chief financial officer of K-Tron, will report to Cynthia L. Lucchese, Hillenbrand’s chief financial officer. Edward B. Cloues II, K-Tron’s chairman and chief executive officer, will be appointed to the Hillenbrand board when the merger is completed. K-Tron’s headquarters will remain in Pitman, NJ.

“We are delighted that K-Tron will be joining the Hillenbrand family of companies,” said Camp. “Although K-Tron’s products differ from ours, we are both manufacturing companies that share similar processes and core operational values. Like our Batesville Casket business, the K-Tron operating companies are leaders in their industries and have highly effective executive management teams. K-Tron has a strong track record of delivering superior financial performance and creating significant shareholder value.”

“Hillenbrand and Batesville Casket represent a long tradition of manufacturing and distribution excellence, and K-Tron’s board and management team are excited to combine our own high-performing people, products and services with Hillenbrand’s,” said Cloues. “We’re looking forward to taking advantage of Hillenbrand’s lean business strengths in planning, processes, and talent development to help create even more opportunities for growth and financial success.”

Under the terms of the definitive merger agreement, a subsidiary of Hillenbrand will merge with and into K-Tron, with the shareholders of K-Tron receiving $150 per share in cash for their common stock. The closing of the merger is subject to customary terms and conditions, including shareholder approval and the expiration or termination of the waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act.

Hillenbrand expects to use cash on hand and proceeds from debt financing to fund the acquisition. The transaction is expected to be accretive to Hillenbrand’s earnings per share in 2010, net of acquisition costs.

P&M Corporate Finance LLC is serving as financial advisor to Hillenbrand, and Goldman, Sachs & Co. is serving as financial advisor to K-Tron. Skadden, Arps, Slate, Meagher & Flom LLP and Baker & Daniels LLP are serving as legal advisors to Hillenbrand, and Morgan, Lewis & Bockius LLP is serving as legal advisor to K-Tron.

Hillenbrand sponsored a conference call and webcast for the investing public at 11 a.m. ET Monday, January 11, 2010. During the event, management discussed the acquisition of K-Tron. The webcast will be available at http://ir.hillenbrandinc.com and will be archived on the company’s Web site through January 11, 2011.

A replay of the conference call will be available through midnight Tuesday, January 26, 2010, at 1-888-203-1112 (1-719-457-0820 for international callers). Please use the confirmation code 4622656.

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