Lonestar to take SPX FLOW private in $3.8bn deal

February 2022 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

February 2022 Issue

In a deal that takes the company private, nutrition, health and industrial markets solutions provider SPX FLOW, Inc. is to be acquired by an affiliate of private equity (PE) firm Lone Star Funds in an all-cash transaction valued at $3.8bn, including the assumption of debt.

Under the terms of the agreement, SPX FLOW investors will receive $86.50 a share in cash. The transaction has been unanimously approved by the SPX FLOW board of directors.

Upon completion of the transaction, SPX FLOW will become a privately held company and its shares will no longer trade on the New York Stock Exchange.

“We are pleased to have reached this agreement with Lone Star, which is the result of a comprehensive review of alternatives, including a robust sale process,” said Robert F. Hull, Jr., chairman of the SPX FLOW board of directors. “As part of the process, SPX FLOW held discussions with multiple strategic and financial parties and evaluated the transaction against the Company’s standalone prospects, performance and outlook.”

Based in Charlotte, North Carolina, SPX FLOW’s product offering is concentrated in process technologies that perform mixing, blending, fluid handling, separation, thermal heat transfer and other activities that are integral to processes performed across a wide variety of nutrition, health and precision solutions markets. The company had approximately $1.4bn in 2020 annual revenues and has operations in more than 30 countries and sales in more than 140 countries.

“We are excited about the opportunity to partner with SPX FLOW,” said Donald Quintin, president of Lone Star Opportunity Funds. “This acquisition is consistent with Lone Star’s strategy to invest in businesses with substantial runway for growth. We have great respect for SPX FLOW’s talented employees and their commitment to innovation and serving customers. We look forward to working with Marc and the entire team to help advance SPX FLOW’s strategy and capture the opportunities ahead.”

Since the establishment of its first fund in 1995, Lone Star has organised 21 PE funds with aggregate capital commitments totalling approximately $85bn. The firm invests on behalf of its limited partners, which include institutional investors such as pension funds and sovereign wealth funds, as well as foundations and endowments that support medical research, higher education and other philanthropic causes.

“SPX FLOW has transformed its business and made important progress executing against our strategic plans,” said Marc Michael, president and chief executive of SPX FLOW. “In Lone Star, we have a partner that brings additional perspective and expertise to support the continued implementation of our strategic initiatives as we deliver reliable outcomes for customers and provide them the high-quality products and services they expect from us.

Serving as exclusive financial adviser to SPX FLOW is Morgan Stanley & Co. LLC, with Winston & Strawn LLP serving as legal adviser. Citi, RBC Capital Markets, LLC, and BofA Securities Inc. are serving as financial advisers to Lone Star, and Gibson, Dunn & Crutcher LLP and Kirkland & Ellis LLP are serving as legal advisers.

The transaction is expected to close in H1 2022, subject to receipt of certain regulatory approvals, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, as well as SPX FLOW shareholder approval and other customary closing conditions.

“This transaction is a testament to the achievements of our employees, and I would like to thank them for all they do to make SPX FLOW the premier process solutions company,” concluded Mr Michael. “We look forward to working with Lone Star to complete the transaction and delivering significant, immediate and certain value to our shareholders.”

Fraser Tennant