John Bean Unveils Revised Ambitious €3.5B Marel Takeover Offer - What's On The Cards?

John Bean Technologies Corp JBT disclosed FY23 preliminary results and FY24 outlook. The company also intends to launch a voluntary takeover offer for Marel in the first quarter 2024.

FY23 Preliminary: The company expects adjusted EPS of $4.05 – $4.15 (vs. prior guidance of $3.95 – $4.10 and consensus: $4.02), adjusted EBITDA of $272 million – $275 million (vs. previous outlook of $265 million – $271 million), and adjusted EBITDA margin of 16.4% – 16.6% (vs. earlier outlook of 16.0% – 16.25%).

The company expects the result to exceed guidance aided by strong operational execution on sourcing actions, manufacturing efficiencies, and a favorable mix from continued growth in recurring revenue. 

On the other hand, John Bean now projects FY23 revenue of $1.66 billion – $1.67 billion (vs. $1.66 billion – $1.68 billion prior outlook) vs. $1.67 billion estimate. 

FY23 income from continuing operations and GAAP EPS include a discrete benefit to the tax provision of $10 million – $11 million, resulting from a reorganization and sale of a legal entity in the fourth quarter of 2023. 

In the fourth quarter of 2023, JBT sees strong orders of $410 million-$420 million and a year-end backlog of $670 million – $680 million.

Takeover Offer: In the first quarter of 2024, John Bean intends to launch a voluntary takeover offer to fully acquire Marel hf for €3.60 per share, representing an enterprise value of about €3.5 billion.

The offer would lead to Marel shareholders receiving around €950 million in cash and holding about 38% ownership interest in the combined company, based on a reference share price of $96.25 per share of JBT. 

Notably, in December, John Bean submitted a revised proposal to acquire Marel for €3.40 per share.

Post closure, JBT expects the combined company to generate annual run-rate cost synergies of over $125 million within three years, with anticipated accretion to cash EPS within the first full year following completion of the merger, along with double-digit return on ROIC within four to five years post-close.

John Bean anticipates the deal to close by the end of FY24, with the pro forma net leverage ratio expected to be less than 3.5x at the end of FY24, before synergies, and well below 3.0x by the end of 2025.

Brian Deck, JBT’s President and CEO, said, “This announcement is a result of productive discussions between the management of JBT and Marel. We look forward to working together on confirmatory due diligence and finalization of the formal voluntary takeover offer on the terms outlined above.”

FY24 Outlook: John Bean initiated preliminary guidance for revenue of $1.75 billion – $1.78 billion (vs. $1.75 billion street view), adjusted EPS of $5.05 – $5.45 (vs. $4.66 estimate), and adjusted EBITDA of $295 million- $310 million.

The FY24 guidance does not include any impact from the proposed Marel transaction.

Brian Deck added, “A key priority of our Elevate 2.0 strategy is to deploy capital to strategic mergers and acquisitions while maintaining financial flexibility, and a merger with Marel would be an exciting and transformational step in our journey. We believe that the highly synergistic merger with Marel will create a compelling platform to accelerate growth and provide meaningful value to all JBT and Marel stakeholders.”

As of September 30, 2023, John Bean held cash and cash equivalent of $526.7 million. 

Price Action: JBT shares are trading higher by 0.72% at $91.80 premarket on the last check Friday.