M&As: Parker to acquire Lord Corporation for US$3 bn;

US-based motion and control technologies specialist Parker Hannifin Corporation is to acquire adhesives supplier Lord Corporation for approximately US$3.6 billion in cash. The transaction has been approved by the Board of Directors of each company and is subject to customary closing conditions, including receipt of applicable regulatory approvals. Upon closing of the transaction, Lord will be combined with Parker’s Engineered Materials Group.

Lord, headquartered North Carolina, is a privately-held company founded in 1924 offering a broad array of advanced adhesives, coatings and speciality materials as well as vibration and motion control technologies. Lord’s products are used in mission-critical applications in the aerospace, automotive and industrial markets. It has annual sales of approximately US$1.1 billion and employs 3,100 team members across 17 manufacturing and 15 R&D facilities globally.

Lord’s proprietary products, solutions and technologies for mission-critical applications will increase Parker’s overall engineered materials product and solutions offerings as well as strengthen Parker’s offering of complementary products in core aerospace and defence, high-value automotive and industrial markets, said the US firms.

“This strategic transaction will reinforce our stated objective to invest in attractive margin, growth businesses, such as engineered materials, that accelerate us towards top-quartile financial performance,” said Tom Williams, Chairman/CEO of Parker. “Lord will significantly expand our materials science capabilities with complementary products, better positioning us to serve customers in growth industries and capitalise on emerging trends such as electrification and lightweighting.”

Parker expects to realise approximately US$125 million in pre-tax run-rate cost synergies by full-year 2023. The cumulative cost to achieve these synergies is expected to be approximately US$80 million. Synergies are expected to come from implementation of supply chain and lean productivity, with cross-selling opportunities and global market distribution to provide incremental revenue synergies over time.