* SPX, Gardner Denver had doubts on deal's success-source
* Private equity firms invited to meet Gardner Denver-source
* Gardner Denver shares down 10.8 pct, SPX shares up 1.1 pct
(Adds Gardner Denver statement, background, updates shares)
By Greg Roumeliotis
NEW YORK, Dec 21 Industrial machinery maker
Gardner Denver Inc has ended talks with SPX Corp
and has invited the private equity firms that had made offers
for the company to re-engage in a sale process, a source
familiar with the matter said on Friday.
Gardner Denver shunned private equity firms abruptly earlier
this month when it entered into exclusive talks to be bought by
SPX, which offered to pay more based on the synergies it thought
it could extract from the Wayne, Pennsylvania-based company,
people familiar with the matter had told Reuters.
Gardner Denver shares tumbled on the news, ending trading on
Friday down 10.8 percent at $67.40 and giving the company a
market value of about $3.3 billion. SPX shares were up 1.1
percent at $65.79.
Talks between SPX and Gardner Denver ended after doubts
emerged on both sides about the deal's success, the source said.
Private equity firms have now been asked to meet with Gardner
Denver management in early January, the source added, speaking
on condition of anonymity because the discussions are
SPX's management came under increasing pressure this week
from some of its shareholders, who questioned the rationale of a
deal and the price offered to Gardner Denver, another source
familiar with the matter said.
Gardner Denver's board met earlier this week and also
expressed reservations about the wisdom of carrying out a deal
following a detailed assessment of SPX's offer, which would have
included a significant stock element, the first source said.
Gardner Denver passed on all-cash offers in the mid-to-high
$70s per share from private equity firms Advent International
Corp, KKR & Co LP and a consortium of TPG Capital LP and
Onex Corp, people familiar with the matter told Reuters
"The Gardner Denver board of directors and management team
continue to work with the company's financial advisor, Goldman,
Sachs & Co, to explore strategic alternatives to enhance
shareholder value," Gardner Denver said in a statement.
"These alternatives could include, among others, enhancing
the company's existing strategic plan or a possible sale or
merger of the company. The company does not intend to discuss or
disclose developments with respect to this process until the
board has approved a definitive course of action," the company
Charlotte, North Carolina-based SPX did not respond to a
request for comment. Advent, KKR and TPG declined to comment,
while Onex did not respond to a request for comment.
The talks between Gardner Denver and SPX focused on an SPX
offer of around $85 per share, a source familiar with the matter
said earlier this week.
Gardner Denver said on Oct. 25 that it was pursuing
strategic alternatives, including a sale of the company,
confirming a Reuters report earlier in the day.
Gardner Denver makes compressors, pumps and vacuum products
for industrial uses. Its decision to explore a sale followed
months of pressure from activist investor ValueAct Capital LLC,
which acquired a roughly 5 percent stake.
The shareholder campaign followed the sudden resignation of
Chief Executive Barry Pennypacker in July and his interim
replacement by Chief Financial Officer Michael Larsen, who last
month was appointed CEO permanently.
Gardner Denver has grappled with lower demand for petroleum
and industrial pumps, which pressured its engineered products
group. That group reported a 20 percent drop in revenue in the
(Reporting by Greg Roumeliotis in New York; Additional
reporting by Soyoung Kim and Michael Erman in New York; Editing
by John Wallace, Richard Chang and Peter Galloway)