Fortive Pens Deal To Buy Electronic Test Solution Provider EA Elektro-Automatik For $1.45B

Fortive Corp FTV signed a definitive deal to acquire EA Elektro-Automatik Holding GmbH for $1.45 billion in cash.

The transaction price, net of $215 million of tax benefits from Bregal Unternehmerkapital, represents a mid-teens projected 2024 EBITDA multiple.

EA Elektro-Automatik supplies high-power electronic test solutions for energy storage, mobility, hydrogen, and renewable energy applications.

The acquisition is expected to be accretive to FTV's adjusted gross and operating margins and neutral to modestly accretive to adjusted EPS in fiscal 2024.

Also, the buyout enhances FTV's high-growth profile with projected high-single-digit ROIC in Year 3 and double-digit ROIC Year 5, along with a potential upside from working capital synergies.

The transaction is expected to close in early Q1 2024, subject to customary closing conditions and regulatory approvals.  

"We are pleased to announce our agreement to acquire EA Elektro-Automatik to enhance our leading position in electronic test and measurement, helping to enable the global energy transition. This acquisition will further position Fortive in multi-decade, multi-industry, high growth markets, leveraging Tektronix's global franchise and the power of the Fortive Business System to create unparalleled value for customers and shareholders," stated James A. Lico, President and CEO.

Fortive plans to fund the acquisition through cash in hand and debt financing. 

As of June 30, 2023, the company had cash and cash equivalents of $712.8 million.

Fortive expects to release Q3 FY23 results on October 25, 2023. 

Price Action: FTV shares are trading lower by 0.77% at $69.70 premarket on the last check Monday.