Ingersoll-Rand Takeover Offer Accepted by Clark : Equipment: The two machinery makers expect the deal will raise their fortunes in the increasingly prosperous field.
Clark Equipment Co., succumbing to a sweetened takeover bid, said Sunday it has agreed to be acquired by Ingersoll-Rand Co. for $1.5 billion.
Both companies manufacture a variety of machinery and industrial equipment, an increasingly prosperous business whose improving fortunes were a major factor behind Ingersoll-Rand’s decision to pursue the Clark deal.
Ingersoll-Rand shocked the market earlier this month when it launched a hostile tender offer for Clark priced at $77 a share, or $1.34 billion--a rare maneuver in the otherwise staid machinery industry. But such companies are becoming targets of both friendly and unfriendly takeover bids, analysts say, because of a rebound in capital spending by U.S. corporations--spending that often includes purchases of machinery and other industrial gear.
For instance, machinery and chemicals maker FMC Corp. made an unsolicited offer last week to buy Moorco International Inc., a maker of valves and other products used in the energy market, for about $223 million.
Ingersoll-Rand, a Woodcliff Lake, N.J.-based producer of goods ranging from industrial air compressors and pumps to coal haulers and lighting control systems, said its definitive merger agreement with Clark was approved both companies’ directors.
The $86-a-share price represents a 12% increase from Ingersoll-Rand’s previous offer for Clark, and a whopping 56% premium over Clark’s trading price of about $55 in late March, just before Ingersoll-Rand launched its initial tender offer.
Clark’s stock closed Friday at $84.125 a share in New York Stock Exchange composite trading, while Ingersoll-Rand finished at $33.125 a share.
Clark, a South Bend, Ind.-based maker of construction machinery, golf carts, light utility vehicles and paving equipment, had termed Ingersoll-Rand’s earlier offer “entirely inadequate.”
But the company said Sunday that the new price “delivers fair value” to its investors.
Ingersoll-Rand, with 1994 sales of $4.5 billion, is more than four times larger than Clark, which had sales of $947 million last year.
But Clark’s earnings were strong last year. The company’s 1994 income from continuing operations nearly tripled from a year earlier, to $62.8 million, and Clark has predicted another year of strong growth for 1995.
Yet even though the machinery companies are enjoying gains in domestic and foreign orders, many of their stocks have fallen this year amid investors’ concern that the recent wave of interest-rate hikes would put a drag on the economy and capital spending.
And that’s made the stocks of companies such as Clark even more attractive to would-be acquirers.
