IR Ingersoll Rand PLC

By Kimberly Chin 

Gardner Denver Holdings Inc. agreed to merge with the industrial division of Ingersoll-Rand PLC, a tie-up that would create the world's second-largest manufacturer of industrial pumps and compressors.

In the deal, Ingersoll plans to spin off its industrial segment, which includes its heating, ventilation and air-and temperature-controlled transport business for buildings, homes and transportation, and then combine it with Gardner Denver.

Ingersoll shareholders would receive 50.1% of the shares in the combined company, valued at roughly $5.8 billion, the companies said Tuesday. Gardner Denver shareholders will own 49.9% of the company. The combined firm would generate about $6.6 billion in revenue this year on a pro forma basis.

The Wall Street Journal reported Sunday the companies were nearing a deal.

The deal would be structured as a so-called Reverse Morris Trust, a tax efficient way for companies to sell off a division.

The new company would be second to Atlas Copco Group, a Swedish industrial conglomerate.

Employees of the combined company who aren't already eligible for equity awards will be granted stock, with distributions totaling about $150 million, the companies said.

The merged company would be led by Gardner Denver Chief Executive Vicente Reynal and the management team will have executives from both companies.

Gardner Denver is part-owned by private-equity firm KKR & Co. Pete Stavros, who runs KKR's industrial group in the Americas, will remain as chairman of Gardner Denver's board. Meanwhile, the board at Ingersoll-Rand will remain in place and be led by its current chairman and CEO Mike Lamach.

Gardner Denver had revenue of $2.69 billion in 2018, while Ingersoll's industrial segment, which includes the businesses that will be merged with Gardner Denver, had revenue of $3.32 billion, according to company filings.

Incorporated in Dublin, Ireland, Ingersoll's North American headquarters is in Davidson, N.C., where the combined company will be located.

On Tuesday, Gardner Denver and Ingersoll separately reported its financial results for the first quarter.

Gardner Denver posted a quarterly profit of $47.1 million, or 23 cents a share, and revenue of $620.3 million. Ingersoll posted a net income of $199.9 million, or 82 cents a share, and revenue of $3.58 billion.

Miriam Gottfried contributed to this article.

Write to Kimberly Chin at kimberly.chin@wsj.com

(END) Dow Jones Newswires

April 30, 2019 07:50 ET (11:50 GMT)

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