Hillenbrand, Inc. (NYSE: HI) on Friday announced it will buy plastic processing company Milacron Holdings Corp. (NYSE: MCRN) in a cash-and-stock deal valued at about USD 2 Billion, including debt. Shares of Hillenbrand sank as much as 13% on the news, while Milacron stock soared nearly 25%.
Under terms of the deal, Milacron shareholders will receive USD 11.80 in cash and 0.1612 Hillenbrand shares for each Milacron share they own. Based on Thursday’s stock closing prices, that values Milacron shares at USD 18.07 each, a 33.5% premium. Upon the deal’s expected close in early 2020, Hillenbrand shareholders will own approximately 84% of the combined company. Milacron stockholders will own about 16%.
“This transaction meaningfully transforms our portfolio and product offering by adding Milacron’s leading technology solutions and sizable installed customer base to help us drive long-term growth,” said Joe Raver, President and Chief Executive Officer of Hillenbrand. The deal will expand Hillenbrand’s reach in markets like construction, consumer packaging, automotive, electronics, medical, and recycling. The combined company will have a presence in more than 50 countries.
According to Hillenbrand, the transaction should deliver double-digit adjusted EPS accretion in the first year following close and generate free cash flow more than USD 325 Million by 2021. In addition, run-rate cost synergies are expected to reach USD 50 Million within three years.
Tom Goeke, Milacron Chief Executive Officer, said the deal is “is a result of the Milacron team’s tremendous progress in enhancing our position as a global leader in plastics technology and processing.” Milacron currently controls 11 brands in the plastic industry.