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Summary
- A deal worth $8 billion has been signed by Teledyne Technologies Inc and FLIR Inc
- FLIR will be acquired by Teledyne under the terms of the agreement, and the transaction will be completed in the middle of 2021
In a joint statement, the industrial sensor giant, Teledyne Technologies Incorporated (NYSE:TDY) and FLIR Incorporated (NYSE:FLIR), an Oregon-based thermal imaging camera making company said that they have entered into a definitive agreement on 4 January. Under the terms of the deal, Teledyne will acquire FLIR for a consideration of $8 billion in a mix of cash and stock to create a super-sized sensor shop with a view to expand its sensor offerings.
(Image source: ©Kalkine Group 2020)
About the deal
The shareholders of FLIR will be entitled to receive $28 per share in cash and 0.0718 shares of Teledyne common stock for each FLIR share. A 40 per cent premium for FLIR stock is reflected in the transaction based on the FLIR’ 30-day volume weighted average price as of the closing price on December 31. The deal is expected to be completed in mid-2021 after the regulatory and shareholder approvals are received, and the acquisition will be immediately accretive to earnings, excluding transaction costs, said Teledyne.
A $4.5 billion 364-day credit commitment has been arranged by Teledyne to fund the transaction and refinance certain existing debt. Prior to closing the deal, Teledyne expects to fund the transaction with permanent financing. Teledyne estimates the net leverage to be approximately 4.0x adjusted pro forma EBITDA at closing.
Evercore would be acting as an exclusive financial advisor for Teledyne and McGuireWoods LLP as a legal advisor with regards to the transaction. Whereas the exclusive financial advisor of FLIR would be Goldman Sachs & Co. LLC and Hogan Lovells US LLP would be the legal advisor in connection with the transaction.
Robert Mehrabian, the chairman of Teledyne said in a statement that the core of both the companies is proprietary sensor technologies and their business models were also similar. Both the companies provide sensors, cameras and sensor systems to their customers. He added that Teledyne’s sensors were “uniquely complementary, with minimal overlap”.
Financial Highlights of Teledyne
On Monday (4 January), Teledyne also announced its preliminary results for Q4 2020. The company recorded sales of roughly $800 million. It expects the GAAP diluted earnings to be in the range of $3.16-$3.19 per share. Teledyne expects the net debt for the full year to be approximately $115 million.
Incorporated in 1960, Teledyne is an American conglomerate that provides cameras and systems, digital imaging sensors, monitoring and control instrumentation, etc. Teledyne is also known for supplying engineered systems for defence, space, environmental and energy applications, and its products are used in the Boeing Space Launch System for NASA.
Based in Oregon, United States, FLIR is the world’s largest commercial company engaged in manufacturing thermal-imaging and night-vision technology for the military, industrial, and consumer applications.
Components for the Lockheed Martin F-35 are provided by FLIR and Teledyne.
Effect on the share price performances
The shares of Teledyne plummeted 8.6 per cent to $358.38 on Monday after the announcement, the largest intraday fall since last March. On the other hand, FLIR shares surged 19 per cent to $52.06 at 12:56 PM in New York, the highest intraday jump since September 2001.
