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(Reuters) – Private equity firm Arcline Investment Management proposed buying Circor International (NYSE:) for $1.8 billion including debt on Wednesday, outselling a rival bid from KKR & Co (NYSE:) for industrial machinery.
Arcline’s bidding war with KKR had already forced the latter to settle its deal with Circor to $1.7 billion from $1.6 billion. Arcline has given Circor until Thursday evening to respond to its latest offering. Circor did not respond to a request for comment on its next steps.
Circor shares closed up 4.3% at $53.68 Wednesday, between KKR’s $51-a-share deal and Arcline’s $57-a-share offer.
KKR said on Wednesday that its deal would not have antitrust risks. On the other hand, Arcline’s money owns a direct competitor to Circor called Fairbanks Morse Defense, a company that provides diesel engines and equipment to the US Navy, according to KKR.
“This is especially important in the current regulatory climate given the growing scrutiny around consolidation of competing suppliers to the defense industrial base,” said the New York-based private equity firm.
US Rep. Rob Whitman, chairman of the US House of Representatives Air and Land Tactical Subcommittee, tweeted that he had concerns about Arcline’s bid because it would lead to a merger of two “important” US fuse producers.
“As we expand our submarine industrial base to meet future demands, we need more information before we decide to support the fuse merger proposal,” Whitman tweeted.
KKR said that had Circor opted for a deal with Arcline, they wouldn’t be able to complete it until the second half of 2024. It added that its deal would close in the fourth quarter of 2023. KKR also plans to give Circor employees equity in the company after the acquisition, as is the case. with many of its companies.
Sercor said Tuesday that KKR offered more certainty over financing as well as a clearer and faster path to obtaining antitrust approvals.
Arcline said its bid was backed by funding from BMO Capital Markets and Bank of Montreal. KKR said it provided full equity backing for its deal, meaning it could only fund it with its own money and those of its investors.
Orders at Circor, which makes flow control products to help manage and control liquids and gases, rose 9% in the most recent quarter, reflecting demand for its services as it benefited from a recovery in the commercial aviation market.
