One of today’s big movers in early morning trading is Milacron Holdings, a company involved in plastics handling that jumped 21% before the bell to near nine month highs. Specifically, Milacron manufactures, distributes, and services plastics systems, active in three categories of industrial process: Melt Delivery & Control Systems, Advanced Plastics Processing Technologies, and Fluid Technologies.
The driver for this growth, according to analysts, is Milacron’s acquisition by Hillenbrand Inc. – a $2 billion cash and stock deal.
“Under terms of the deal, Milacron shareholders will receive $11.80 in cash and 0.1612 Hillenbrand shares for each Milacron share they own,” writes Tomi Kilgore at MarketWatch. “Based on Thursday’s stock closing prices, that values Milacron shares at $18.07 each, a 33.5% premium. Hillenbrand expects the deal, which is anticipated to close in the first quarter of 2020, to add to increase adjusted earnings in the “double-digit” range in the first year after closing, and deliver annualized cost synergies of about $50 million within three years.”
“After careful review, our Board unanimously concluded that a combination with Hillenbrand represents a unique opportunity to provide Milacron stockholders with significant and immediate value and the ability to benefit from the upside potential of the combined company,” Milacron CEO Tom Goeke said in a press statement. “Hillenbrand has a tremendous track record of growing and driving value across its portfolio of highly engineered products. Together, we will continue to provide customers with breakthrough products and customized systems. This combination is a result of the Milacron team’s tremendous progress in enhancing our position as a global leader in plastics technology and processing. I am confident we have found a strong partner in Hillenbrand and look forward to a seamless transition.”
News of the deal hasn’t done as well for Hillenbrand stock, as the equity moves down about 12% – that said, despite volatility, Hillenbrand is basically sideways over six months so for by an holders entering this year there’s still a significant potential upside
Milacron, by contrast, is up 14% year to date.