Teledyne buys Flir in $8bn deal
Teledyne Technologies is to acquire Flir Systems in a deal valued at $8bn.
The acquisition adds Flir's thermal and infrared imaging technologies to Teledyne's visible imaging capabilities. It will increase the digital imaging segment of Teledyne's business from 32 per cent to 59 per cent, with Teledyne's expected combined sales reaching $5bn once the acquisition is complete.
Robert Mehrabian, executive chairman of Teledyne, noted in a statement: 'At the core of both our companies is proprietary sensor technologies. Our business models are also similar: we each provide sensors, cameras and sensor systems to our customers. However, our technologies and products are uniquely complementary with minimal overlap, having imaging sensors based on different semiconductor technologies for different wavelengths.'
Under the terms of the agreement, Flir stockholders will receive $28.00 per share in cash and 0.0718 shares of Teledyne common stock for each Flir share, which implies a total purchase price of $56.00 per Flir share based on Teledyne’s five-day volume weighted average price as of 31 December 2020.
As part of the transaction, Teledyne has arranged a $4.5bn 364-day credit commitment to fund the transaction and refinance certain existing debt. Teledyne expects to fund the transaction with permanent financing prior to closing.
Net leverage at closing is expected to be approximately 4.0x adjusted pro forma EBITDA with leverage declining to less than 3.0x by the end of 2022.
Teledyne bought Princeton Instruments, Photometrics and Lumenera for $225m at the start of 2019, to follow up on its purchase of e2v for £627m in 2016. It bought Dalsa in 2011.
Teledyne expects fourth quarter sales of approximately $800m.
Flir has also grown through acquisition, notably buying Point Grey for $253m in 2016. Recently, Flir has seen demand for its thermal imaging equipment grow during the pandemic for screening people for signs of fever. This was partially offset in Q3 of 2020 by lower volumes of orders for commercial markets such as security.
In Q3 of last year, Flir recorded $466.4m of revenue, compared to $471.2m for the prior year.
The transaction, which has been approved by the boards of directors of both companies, is expected to close in the middle of 2021 subject to the receipt of required regulatory approvals.