Altra Industrial Motion to merge with Fortive’s Automation & Specialty platform

Altra Industrial Motion (AIMC) announced that its Board of Directors has unanimously approved a definitive agreement to combine Altra with four operating companies from Fortive’s (FTV) Automation and Specialty platform in a transaction, having an estimated aggregate value of approximately $3B, based on the 20-day volume weighted average stock price of Altra shares as of March 6, 2018.

The transaction is expected to be tax free to the companies’ respective shareholders.

As a result of this transaction, Altra will significantly expand its position across the technology spectrum by bringing together its strong mechanical and electronic capabilities in engineered power transmission, such as couplings, clutches and brakes and gearing with Fortive A&S’s strong electric, electronic and software content in precision motion control, including engineered servo-motors, direct drive and linear automation.

Altra will have increased exposure to higher growth, higher margin categories as well as the scale and global reach to better serve its customers. It will also have an enhanced financial profile, with sales and earnings growth expected to generate substantial free cash flow enabling the company to quickly de-lever.

The transaction will double Altra’s revenue to approximately $1.8B and increase its EBITDA to approximately $350M, or 20% margins for the twelve months ended December 31, 2017.

The combined company is expected to generate cumulative five-year free cash flows in excess of $1B.

The transaction is expected to be immediately accretive to non-GAAP adjusted diluted earnings per share. Upon close of the transaction, the combined company will continue to be led by Altra’s current Chairman and CEO, Carl Christenson, and Christian Storch will remain CFO.

Altra’s senior management team will be expanded to include both Altra and Fortive A&S employees.

Altra will increase the size of its Board with the addition of one board member designated by Fortive.

Altra will remain headquartered in Braintree, Massachusetts. Following completion of the transaction, the combined company is expected to have approximately 9,300 employees worldwide, with approximately 4,600 coming from Altra and 4,700 joining from Fortive A&S.

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