Gardner Denver looks to go public, again

Plans to use IPO proceeds to pay down debt

Reynal

A little more than three and a half years after a private equity firm acquired Gardner Denver, the manufacturer is looking to return to public trading to help pay down $2.78 billion in debt.

Gardner Denver president and CEO Vicente Reynal.
Gardner Denver president and CEO Vicente Reynal.

Milwaukee-based Gardner Denver Holdings Inc., which makes flow control and compression equipment for industrial, energy and medical markets, filed forms with the SEC Tuesday to begin the process for an initial public offering. The filings say the company would look to offer $100 million worth of its stock, although that number is included only for calculating registration fees. Reuters reported the IPO could value the company at $6 billion to $7 billion, including debt.

The company has not determined the number of shares to be offered, the price range or which stock exchange it will be listed on.

Gardner Denver was acquired by private equity firm KKR & Co. L.P. in July 2013 for $3.74 billion. The deal gave the company a value at the time of $3.9 billion, including debt.

The deal also made the company private and KKR plans to continue owning a majority of the company’s shares following the IPO.

After the acquisition, former Bucyrus and current Rev Group chief executive Tim Sullivan was named CEO. Sullivan helped move the company’s corporate headquarters from suburban Philadelphia to Milwaukee in 2014 before resigning. The company grew its presence in Milwaukee to 60 employees by mid-2015.  The company is eligible for $2 million in state tax credits for creating 200 jobs and making $4 million in capital investments.

The company has undergone significant changes since the acquisition. That includes 45 of the top 100 business managers joining the company. None of the company’s named executive officers were with Gardner Denver before the acquisition.

The new leadership team has sought to expand the company’s sales and service presence by adding adjacent and innovative products, increase aftermarket sales, improve salesforce effectiveness, reduce costs in both manufacturing and corporate operations and other initiatives aimed at creating a performance-oriented organization.

The results of those efforts haven’t exactly shown up in the company’s top and bottom line results. The company reported $1.94 billion in revenue for 2016, down 24.5 percent from 2014 and 8.8 percent from 2015. In 2016, Gardner Denver had a net loss of $36.6 million, down from a $351.2 million loss in 2015 and $135 million in 2014. The company hasn’t posted a profit since 2012, the last full year before the acquisition.

Gardner Denver’s performance was impacted by a number of outside factors including weakness in industrial end-markets, the downturn in oil and gas industries, and a strong U.S. dollar.

But the company has also had $42.7 million in restructuring expenses over the last three years and is looking at incurring roughly $9 million to $15 million in additional expenses.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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