U.S. diversified manufacturer Crane Co (CR.N) said it will buy MEI Conlux Holdings and its Japanese affiliate for about $820 million from private equity firms Bain Capital and Advantage Partners to widen its base in making machines that can handle money through automated mechanisms.
Crane has invested over $220 million to grow its payment solutions business in recent years and MEI Conlux is the company's third deal since 2006 in a business segment that caters to a range of automated money handling solutions, aimed at the gaming, retail, transportation and vending markets.
In 2006 Crane bought Cash Code, which specializes in bill validation and dispensing devices, and Telequip, which provides coin dispensing equipment.
Crane acquired NRI, a European coin validation and dispensing business, in 1985 as part of the acquisition of UniDynamics Corporation.
Crane expects the MEI deal to add to earnings within the first year of acquisition by about 25 cents per share, including 5 cents in synergies.
"We expect synergies to grow to $25 million annually on a pre-tax basis, or 30 cents per share in 2015," Crane Chief Executive Eric Fast said in a statement.
MEI is a manufacturer of electronic bill acceptors, coin mechanisms and other unattended transaction systems. The company provides products for the vending, gaming, amusement, transportation, retail and kiosk markets.
"This acquisition is consistent with our strategy of niche market leadership," Fast said.
Fast also said the MEI deal would materially strengthen the company's existing payment solutions business, which has grown through three acquisitions beginning in 2006.
Crane said that it intends to finance the deal through a combination of cash on hand and additional debt.
MEI Conlux had sales of about $400 million in 2012, and employs 820 people worldwide. Crane's payment solutions business had annual sales of $175 million. On a pro forma basis, the combined sales of MEI and Crane Payment Solutions would be about $575 million in 2012.
The company said it continues to expect 2012 earnings in the lower half of the previously communicated outlook range of $3.75 to $3.85 per share.
Analysts, on average, were expecting 2012 earnings of $3.75 per share, excluding special items, according to Thomson Reuters I/B/E/S.
Also, the company's preliminary outlook for 2013 includes core sales growth of between 2-4 percent, excluding acquisition and foreign exchange impacts, and earnings per share in a range of $4.05 to $4.20. Analysts are expecting the company to earn $4.13.
Bain Capital is one of the world's biggest private equity firms with about $67 billion in assets under management.
Advantage Partners is a private equity firm based in Japan, which established the first buyout fund in the country in 1997, according to its website.
(Reporting by Sakthi Prasad in Bangalore; Editing by Muralikumar Anantharaman and Chris Gallagher)