Industrial equipment and casket maker Hillenbrand Inc. has agreed to acquire Cincinnati-based plastics-processing equipment maker Milacron Holdings Corp. in a deal valued at $2 billion, the companies announced Friday morning.
According to the deal, Milacron shareholders will receive $11.80 in cash and a 0.1612 share of Hillenbrand stock for each Milacron share they own. That values Milacron shares at $18.07 each, a 33.5% premium over Thursday’s closing.
Milacron shares jumped 23%, to $16.69 each, in early trading Friday.
The deal also includes the assumption of about $686 million in debt. The companies expect the deal to close in the first quarter of 2020. The deal has been approved by the boards of both companies.
Upon closing, Hillenbrand shareholders are expected to own about 84% of the combined company and Milacron stockholders will own about 16%. The combined company is expected to generate annual revenue of about $3 billion.
Shares in Hillenbrand were down 11.6% early Friday, to $34.21 each.
Hillenbrand, which employs about 2,500 people in its home city of Batesville, Indiana—about 65 miles southeast of Indianapolis—is only about 45 miles west of Cincinnati.
Milacron manufactures, distributes, and services systems in the plastics technology and processing industry, as well as fluid technologies and processing systems. The company got its start in 1860 as a screw shop.
Hillenbrand, founded in 1906, has long been known as one of the nation’s largest makers of caskets, but that business now accounts for only about a quarter of the company’s sales. Hillenbrand reported sales of $1.77 billion in 2018.
Over the past decade, Hillenbrand has acquired a portfolio of non-casket-related industrial companies—Rotex, Coperion, Terrasource Global, Red Valve, and Abel.
These companies make machines used by factories to make other machines and products—extruders, pneumatic conveying equipment, separation equipment, etc.
The acquisition is expected to nearly double overall employment at Hillenbrand to 12,000 worldwide.
“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,” Hillenbrand CEO Joe Raver said in written comments. “Milacron aligns with our profitable growth strategy and acquisition framework and we expect the additional capabilities from its high-performing segments to accelerate free cash flow generation and improve margins across the business.”