Why Hillenbrand Stock Skyrocketed Today
Key Points
The company is being taken private in a deal valued at nearly $4 billion.
Its new owner will be an affiliate of private equity firm Lone Star Funds.
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One of the better-performing stocks on the New York Stock Exchange (NYSE) Wednesday was Hillenbrand (NYSE: HI). The specialized industrial company saw its share price leap more than 18% on news that it's going private in a splashy buyout deal. That rise was far more pronounced than the S&P 500's (SNPINDEX: ^GSPC) 0.4% bump.
A $3.8 billion buyout
Before the NYSE opened for trading that day, Hillenbrand announced it has signed a definitive agreement to be acquired by an unnamed affiliate of private equity firm Lone Star Funds. The deal will be effected entirely in cash, to the tune of $32 per Hillenbrand share. All told, the company said, the enterprise value of the arrangement is around $3.8 billion.
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Hillenbrand said that the purchase price represents a premium of around 37% over its Aug. 12 closing share price.
In the press release trumpeting the deal, the company quoted chairperson of its board of directors Helen Cornell as saying that it "delivers immediate and certain cash value to our shareholders at a substantial premium to recent trading."
She added that it also "positions Hillenbrand to continue meeting and exceeding customers' needs for highly engineered, mission-critical processing equipment and solutions."
Bye bye, stock market
When the buyout closes, Hillenbrand will delist from the NYSE, and thus no longer be publicly traded. The company anticipates the buyout will be completed by the end of the first calendar quarter of 2026. It is subject to approval by its shareholders, and that of the relevant regulatory bodies.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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