Hardinge Inc. (Elmira, NY) a provider of metalcutting solutions and accessories, entered into a definitive merger agreement on Feb. 12 under which Hardinge will be acquired by an affiliate of Privet Fund Management LLC.
Under the terms of the agreement, Privet will acquire all shares of Hardinge common stock not currently owned by Privet for $18.50 in cash, for a total transaction value of approximately $245 million. The purchase price represents a premium of 12.1% over the closing price of $16.50 on November 1, 2017, the last unaffected trading day prior to the public announcement by Privet that it was evaluating a potential transaction to acquire Hardinge, and represents a 26.7% premium over the unaffected volume weighted average price for the three-month period ending on November 1, 2017. The purchase price also represents a premium of 8.3% over the closing price on February 12, 2018.
The agreement was negotiated and unanimously recommended to the Hardinge board of directors by the Strategic Alternatives Committee of the board, which consisted solely of independent directors and was formed to evaluate strategic alternatives, including this potential transaction. Affiliates of Privet currently own approximately 10.46% of the outstanding shares of Hardinge common stock and have agreed to vote their shares in favor of the proposed transaction.
Christopher DiSantis, chairman of Hardinge and the Committee, said, “We are pleased to have successfully negotiated a transaction at this robust point in the business cycle that we believe is in the best interests of the shareholders. The Committee, with the assistance of our financial and legal advisors, carefully analyzed Privet’s offer and came to this conclusion after thorough consideration and extensive negotiation. The transaction provides significant value and liquidity for our shareholders, as well as continuity and opportunities for future growth for our employees, and a full opportunity to market test the price in a rigorous go-shop process.”
“The Committee and the independent directors of the Board unanimously recommend that the Company’s shareholders vote in favor of the proposed transaction,” Mr. DiSantis concluded.
Ryan Levenson, principal and portfolio manager of Privet, said, “Hardinge has been a valued partner and solutions provider to global manufacturers for over 100 years. We believe the company has the talent and capabilities to advance to the forefront of innovation. We look forward to deepening our relationship with the Company, its global team and its customers all around the world, as we work with Hardinge to achieve its long-term vision for growth.”
The transaction is subject to approval of two-thirds of the shares of Hardinge common stock entitled to vote at the shareholder meeting. The transaction, which is not subject to a financing condition, is currently expected to close by the end of the second quarter of 2018, subject to shareholder approval and other customary closing conditions and regulatory approvals. Privet will finance the transaction through a combination of equity and debt. The debt financing is to be provided by White Oak Global Advisors, LLC.
Under the terms of the merger agreement, Hardinge may solicit acquisition proposals from third parties during a 45-day “go-shop” period that ends on March 28, 2018. It is not anticipated that any developments will be disclosed with regard to this process unless the Company’s Board of Directors makes a decision with respect to a potential superior proposal. The merger agreement provides Privet with a customary right to match a superior proposal. There is no assurance that this process will lead to any competing proposals or any superior proposal. Hardinge’s outreach during the go-shop period will be conducted by its financial advisor, BMO Capital Markets Corp., and any person requiring further information may contact Sean Sullivan at (212) 702-1123 or firstname.lastname@example.org .