Barnes agrees to be acquired by Apollo for $3.6 billion in cash

By Ciara Linnane

Engineered-products provider to be taken private for $47.50 per share in cash

Barnes Group Inc.'s stock rose 2.5% Monday after the provider of engineered products and industrial technologies said it has reached an agreement to be acquired by funds of private-equity firm Apollo Global Management for $3.6 billion in cash.

Under the terms of the deal, Barnes (B) shareholders will receive $47.50 per share in cash, equal to a premium of about 22% over the company's undisturbed closing share price on June 25, 2024, and about 28% over the volume-weighted average price for the 90 days that ended on June 25.

The deal is expected to close before the end of the first quarter of 2025. The Barnes board has voted unanimously in favor of the deal and is encouraging its shareholders to do the same.

D.A. Davidson analysts said they also view the deal as the best outcome for the company's shareholders "at this juncture." Analysts led by Matt J. Summerville downgraded the stock to neutral from buy on the news and said they don't expect other parties to emerge to compete with Apollo.

The valuation at 10.0x enterprise value to earnings before interest, taxes, depreciation, and amortization - a measurement of value relative to earnings - may be viewed as "undemanding," the analysts wrote.

But it likely "takes into consideration what may be more of an L-shaped recovery within its Industrial segment as well as what we know to be a heavy-lift, largely European domiciled restructuring that is likely not absent challenges," they said in the note.

The current strike by machinists at Boeing Co. (BA) has likely also weighed on Barnes, the analysts added.

Barnes makes components for a number of sectors including aerospace, where it is planning to expand. It's also active in healthcare, consumer and electronics products.

"We see opportunities to further invest in and grow Barnes's businesses, which are positioned to benefit from long-term aerospace demand trends, as well as the need for high-performance components and solutions for a range of end-markets," Apollo partner Antoine Munfakh said in prepared remarks.

Once the deal closes, Barnes will be delisted from the New York Stock Exchange and become a privately held company. It will continue to operate under the Barnes name and brand.

The company is expected to report third-quarter earnings on Oct. 25 but will not conduct its usual conference call as it prepares to go private. The company has also suspended guidance for 2024.

Barnes's stock has gained 42% in the year to date, while the S&P 500 has gained 20%.

-Ciara Linnane

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10-07-24 1053ET

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