Investors in airplane parts supplier Kaman (KAMN 100.85%) woke up to a very pleasant surprise this morning. Private equity firm Arcline Investment Management has announced it will buy the stock for a huge premium.
And Kaman shares have doubled in a single day — up 101.4%, to be precise, through 11 a.m. ET.
Kaman’s big buyout offer
Arcline is offering $46 per share — cash — to take Kaman private, in a transaction valued at $1.8 billion inclusive of debt. (Kaman has about $382 million in long-term debt, plus other liabilities, for a total of about $828 million, according to data from S&P Global Market Intelligence.) And as Kaman pointed out in a press release, this price is about 110% of what its shares have fetched on the stock market over the last three months — a result that management deadpans “maximizes value for shareholders.”
And how!
For a company that grew its sales only 6% last quarter, and lost money regardless, getting such a large premium from selling the company in one piece is surely a pleasing result for existing shareholders.
What’s next for Kaman shareholders
Granted, the company still must go through the motions of getting shareholders to approve the deal (although that shouldn’t be hard). Regulators will also need to approve the deal, and that could be trickier given Kaman’s position within an already well-consolidated aerospace and defense industry and the Biden administration’s potential aversion to further concentration here. (See the recent rejection of JetBlue’s deal to acquire Spirit Airlines.)
But if all goes well, Kaman and its buyer hope to close this acquisition in the first half of 2024. That’s when Kaman shareholders should see their shares disappear, each to be replaced with $46 in cold, hard cash.
And the best news of all? Getting Kaman back to profitability will become someone else’s problem.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
