Arcline outbids KKR as Circuit bidding escalates.

Nick Dunn June 28, 2023 International News and Affairs

Private Equity Firm Arcline Investment Management Proposes to Buy Circor International

June 28 (Reuters) – Private equity firm Arcline Investment Management on Wednesday proposed to buy Circor International (CIR.N) for $57 per share in cash, topping a rival bid from KKR & Co (KKR.N) for the industrial machinery maker.

New Offer Surpasses Rival Bid

The new offer is $6 more than the rival bid and comes after the target company snubbed a proposal from an unnamed bidder, which sources identified as Arcline, and instead chose to sell itself to KKR in a $1.7 billion deal.

No Antitrust Risks Expected for Potential Deal

Meanwhile, KKR said on Wednesday said a potential deal would have no antitrust risks given the lack of competitive overlap, sending the shares of Circor to more than five-year high of $54.94.

Circor Declines to Comment

Circor, which makes flow-control products to help manage and control liquids and gases, did not respond to a Reuters request for comment.

Concerns Surrounding Competitive Overlap

Arcline’s funds own a direct competitor of Circor called Fairbanks Morse Defense, a provider of diesel engines and equipment to the U.S. Navy, KKR said.

Arcline Sets Deadline for Response

“This is particularly important in the current regulatory climate given heightened scrutiny around consolidation between competing suppliers of the Defense Industrial Base,” the private equity said.

Financing and Bid Support

Arcline said its binding proposal would expire if the board does not declare it to be a “superior proposal” by no later than 8:00 p.m. ET on Thursday. It said its bid was supported by financing from BMO Capital Markets Corp and Bank of Montreal.

KKR Offers Financing Certainty and Faster Antitrust Approvals

Circor too had said on Tuesday that KKR offered more financing certainty as well as a clearer and faster path to antitrust approvals.

Increasing Orders Reflect Demand for Circor’s Services

Circor saw a 9% rise in orders in its most recent quarter, reflecting demand for its services as it benefited from a recovery in the commercial aerospace market.