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Chart Industries to Sell Roots Business to Ingersoll Rand for $300 Million

Strategic Insights

— 2 min read

Chart Industries, Inc., a global leader in the design, engineering, and manufacturing of process technologies and equipment, has announced that it has signed a definitive agreement to sell its Roots business to Ingersoll Rand Inc. for an all-cash purchase price of $300 million. The transaction, which is subject to customary closing conditions, is expected to close in the third quarter of 2023.

Key Takeaways:

  • The Roots business, a leading provider of low-pressure compression and vacuum technologies, will be sold to Ingersoll Rand for $300 million, representing an attractive low-teens adjusted EBITDA multiple.
  • Ingersoll Rand will assume ownership of the Connersville, Indiana manufacturing facility and retain approximately 300 team members.
  • The sale is a key step in Chart's deleveraging plan and will allow the company to focus on its core strategic solution offering and integration efforts.
  • Chart is reiterating its full year 2023 anticipated outlook for revenue, adjusted EBITDA, adjusted earnings per share, adjusted free cash flow and operational cash flow available for debt paydown, as well as its 2024 adjusted EBITDA outlook of $1.3 billion.
  • Vicente Reynal, chairman and CEO of Ingersoll Rand, stated that the company has long admired Roots and is thrilled to add the iconic brand to its portfolio, expanding its low-pressure compression and vacuum product offerings.
  • Chart's CEO and President, Jill Evanko, expressed excitement about the transaction, citing it as a key step in the company's deleveraging plan and allowing Chart to focus on its core strategic solution offering and integration efforts.
  • BofA Securities is serving as exclusive financial advisor and Winston & Strawn LLP is serving as legal counsel to Chart, while Citi is serving as financial advisor and Simpson Thacher & Bartlett LLP is serving as legal counsel to Ingersoll Rand.

Statistics:

  • The purchase price for the Roots business is $300 million, representing an attractive low-teens adjusted EBITDA multiple.
  • Chart is reiterating its full year 2023 anticipated outlook for revenue, adjusted EBITDA, adjusted earnings per share, adjusted free cash flow and operational cash flow available for debt paydown, as well as its 2024 adjusted EBITDA outlook of $1.3 billion.
  • The net leverage ratio as of March 31, 2023 was 4.08X, and assuming the approximately $300 million of cash from this divestiture had been available for debt paydown, the pro forma net leverage ratio would have been 3.88X.

Sources:

  • "Chart Industries, Inc. and Howden USA Company Announce Agreement to Sell Roots Business to Ingersoll Rand Inc." (press release)
  • "About Chart Industries, Inc." (Chart Industries website)
  • "Private Securities Litigation Reform Act of 1995" (SEC website)

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