Kaman to Acquire Bal Seal Engineering, Inc., Significantly Expanding and Diversifying Portfolio to Drive Continued Shareholder Value
Complementary Acquisition Directly Aligned with Strategy to Grow Highly Engineered Product Offerings
Diversifies Reach into High-Growth and High-Margin Medical and Industrial End Markets
Transaction Expected to be Accretive to Cash Flow in Year One with Additional Opportunities to Drive Meaningful Margin Expansion
Bal Seal has been a leader in the design, development, and manufacturing of precision springs, seals, and contacts for the last sixty years. With a strong platform of more than 240 patents across its proprietary manufacturing and material technologies, Bal Seal specializes in delivering critical components to customers in the medical technology, aerospace and defense, and industrial end markets. Bal Seal has an established global presence, with manufacturing, sales, and distribution operations across the U.S.,
“Following the recent sale of our distribution business, Kaman’s strategic focus has centered on growing our highly engineered products business, enhancing margins, and driving free cash flow generation,” said
“The combination of Bal Seal and Kaman represents a compelling opportunity for Bal Seal, our employees, and all our stakeholders,” said
Strategic and Financial Benefits of the Transaction
Establishes a Leading Engineered Products Provider: With a larger and even more extensive portfolio of engineered products and offerings, the combined company will be better able to serve customers across a range of critical applications. The combined company will leverage Kaman’s expertise in running a solutions-based business and Bal Seal’s proprietary manufacturing and material science technologies to enhance its engineered products business and add scale to its operations.
Provides Access to New, High-Growth End Markets: The combined company will have broad exposure to attractive end markets with significant growth potential, including medical, industrial, and aerospace and defense. With Bal Seal, Kaman will have a strong position in the higher growth medical end market.
Delivers Financial Benefits: The transaction is expected to be accretive to Kaman’s cash flow in the first year following the close of the transaction. The addition of the Bal Seal family of products to the Kaman portfolio of highly engineered products will be margin accretive. The purchase price, which Kaman will fund with cash on hand, values Bal Seal at 12.5x EBITDA, including estimated tax benefits and synergies.
A presentation providing an overview of the key transaction terms and strategic rationale has been posted to our website at www.kaman.com/investors/presentations.
Approvals and Time to Close
The transaction is expected to close before year end, subject to customary closing conditions, including regulatory approvals in the U.S. and
Advisors
About
About
Risks Associated with Forward-Looking Statements
This release includes "forward looking statements" within the meaning of the federal securities laws relating to the announced transactions, including the benefits of the transactions, the anticipated timing of the transactions, and the expected performance and future operations of Kaman, which can be identified by the use of words such as “will,” “expect,” “poise,” “believe,” “plans,” “strategy,” “prospects,” “estimate,” “seek,” “target,” “anticipate,” “intend,” “future,” “likely,” “may,” “should,” “would,” “could,” “project,” “opportunity,” “will be,” “will continue,” “will likely result,” and other words of similar meaning in connection with a discussion of the proposed transactions or future operating or financial performance or events. These statements are based on assumptions currently believed to be valid but involve significant risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from those expressed in the forward looking statements. Such risks and uncertainties include, among others, (i) the ability of the parties to satisfy the conditions precedent and consummate the announced transactions; (ii) the ability of the parties to secure regulatory approvals with respect to the Hart-Scott-Rodino Antitrust Improvements Act and other applicable antitrust and competition laws in a timely manner; (iii) the risk that the consummation of the announced transactions will not be completed in a timely manner, which may adversely affect the price of Kaman’s securities; (iv) the effect of the announcement or pendency of the transactions on Kaman’s or Bal Seal’s business relationships, operating results and businesses generally; (v) the outcome of any legal proceedings that may be instituted against Kaman or Bal Seal related to the definitive transaction agreement or the announced transactions; (vi) Kaman’s ability to enforce and protect Bal Seal’s intellectual property; (vii) risks that the announced transactions disrupts the current plans and operations of Kaman or Bal Seal; (viii) the representations and warranties provided by Bal Seal and Kaman’s rights to recourse are limited in the definitive transaction agreement and, as a result, the assumptions on which its estimates of future results of the business have been based may prove to be incorrect in a number of material ways, which could result in an inability to realize the expected benefits of the announced transactions or exposure to material liabilities; (ix) the inability of Kaman to successfully integrate the operations of Bal Seal and realize anticipated benefits of the announced transactions; (x) Kaman’s ability to profitably attract new customers and retain existing customers; (xi) the ability to implement the anticipated business plans following closing and achieve anticipated benefits and savings; and (xii) future and estimated revenues, earnings, cash flow, charges and expenditures. The foregoing list of factors is not exhaustive. Additional risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward looking statements are identified in our reports filed with the
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Source:
Kaman Corporation
James Coogan
VP, Investor Relations
(860) 243-6342
james.coogan@kaman.com