Chart Industries to acquire Howden for $4.4B

Chart Industries announced that it has signed a definitive agreement to acquire Howden, a leading global provider of mission critical air and gas handling products and services, from affiliates of KPS Capital Partners, LP. The purchase price is $4.4 billion and will be funded through a combination of cash and shares of a newly created class of preferred stock. The acquisition is subject to the receipt of certain regulatory approvals and the satisfaction of other customary closing conditions and is expected to close in the first half of 2023. The acquisition will result in estimated combined revenue of approximately $3.4 billion based on the trailing twelve months as of August 31, 2022. The purchase price represents 12.9x Howden’s adjusted EBITDA for the 12 months ended August 31, 2022, or 8.5x including estimated annual cost synergies of $175 million to be achieved in the first 12 months of ownership. In addition to cost opportunities, Chart has identified significant commercial synergies that are expected to reach $350 million annually by year three. Howden, headquartered in the U.K., is a leading global provider of mission critical air and gas handling products providing service and support to customers around the world in highly diversified end markets and geographies. Howden manufactures highly engineered fans, compressors, rotary heat exchangers, steam turbines, and other air and gas handling products, services, and solutions. With over 160 years of experience as a world-class application engineering and manufacturing company, Howden enables customers to achieve environmental and operational targets and efficiencies, including decarbonization of operations. Chart and Howden have similar cultures and values, as well as a history of successful cooperation on multiple successful projects in the past. With over 11,650 employees and a presence in 35 countries, post-closing the combined company will scale to offer more complete solutions across the Nexus of Clean in broader geographies and markets, thereby providing customers a further opportunity to have a one-stop shop for their full solution needs. Our aligned cultures are committed to serving customers and increasing productivity, and the combined leadership team will represent a combination of talent from both organizations, with Jill Evanko, CEO and President of Chart running the combined business post-closing. Ross Shuster, Howden’s CEO, will continue to serve as an advisor of the combined business for up to one-year following the closing of the acquisition to support Chart in its integration efforts. The acquisition purchase price of $4.4 billion will be funded through a mix of cash and shares of a newly created class of preferred stock, which may represent approximately $1.1 billion of the purchase price. Chart has $3.375 billion of fully committed bridge financing in place from J.P. Morgan and Morgan Stanley Senior Funding, Inc. Chart expects to pursue a long-term financing structure expected to include a combination of term loans, senior secured and unsecured notes. The Company will prioritize deleveraging to reduce its net leverage ratio to the high-2x range by the end of calendar 2024 and an ongoing target of 2.0 – 2.5x. In connection with its deleveraging plans, Chart does not intend to undertake any material acquisitions or share repurchases until its leverage ratio returns to targeted levels.