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KeyBank Backs Parker Hannifin’s Acquisition of Exotic Metals Forming Company

September 17, 2019, 08:45 AM
Filed Under: Mergers & Acquisitions
Related: KeyBank

Parker Hannifin Corporation, a global leader in motion and control technologies, completed its acquisition of Exotic Metals Forming Company LLC for $1.725 billion in cash. Exotic is a manufacturer of innovative and technically demanding, high-temperature, high-pressure air and exhaust management solutions for aircraft and engines.  The transaction is expected to be accretive to Parker’s organic growth, EBITDA margin, EPS and cash flow, after adjusting for one-time costs, and to achieve high single-digit ROIC in year five with continued expansion.

On September 4, 2019, Parker entered into a Credit Agreement among Parker, the lenders party thereto and KeyBank National Association, as administrative agent. The Credit Agreement provides for a senior unsecured delayed-draw term loan facility in an aggregate principal amount of $925 million. In connection with the consummation of the Acquisition, on September 16, 2019, Parker borrowed $925 million in the aggregate under the Term Loan Facility to pay a portion of the purchase price and other fees and expenses related thereto.

Exotic’s high-temperature engine build-up technologies, engine exhaust nozzles, complex engine turbine hot section assemblies, and airframe and engine ducting will complement Parker’s portfolio of flight control, fuel and inerting, hydraulics, fluid conveyance and engine technologies.

“We are pleased to welcome the Exotic team to Parker,” said Tom Williams, Chairman and Chief Executive Officer of Parker.  “The addition of Exotic significantly expands our capabilities and increases Parker’s offering in the attractive engine segment, serving high growth programs.  This strategic transaction reinforces our stated objective to invest in attractive margin, growth businesses, such as aerospace, that accelerate us towards top-quartile financial performance.”

“The addition of Exotic to the Parker Aerospace Group creates significant growth opportunities,” said Roger Sherrard, Vice President and President – Aerospace Group.  “Exotic will operate as a stand-alone division within the group, specializing in some of the most complex and demanding aircraft applications.  Their unique products and proprietary manufacturing capabilities will complement Parker Aerospace products and solutions, resulting in a stronger value proposition for customers.”

An integration team has been formed and a detailed integration plan is underway, which is expected to facilitate a smooth transition between Parker and Exotic and allow realization of synergies between the two organizations.  Exotic Metals Forming will become a stand-alone division and will continue to be led by Bill Binder, formerly Exotic President and CEO.

Binder added, “The growth opportunities Exotic will have as part of Parker are substantial.  We look to the future with optimism and excitement as we leverage our combined capabilities to the benefit of our customers and team members.”

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