The corporate operations of the combined Gardner Denver and Ingersoll Rand industrial segment will be located in Davidson, North Carolina, the companies said Tuesday.
Gardner Denver and Ingersoll Rand announced plans to merge the currently Milwaukee-based company with Ingersoll Rand’s industrial segment on Tuesday. The Wall Street Journal first reported the possibility of the deal on Sunday. The combined company will take the Ingersoll Rand name and trade under the ticker symbol “IR” on the NYSE.
The new industrial company will have around $6.6 billion in revenue and $1.6 billion in annual adjusted earnings before interest, tax, depreciation and amortization. The companies anticipate $250 million in cost synergies from the deal, primarily tied to global manufacturing and service footprint changes, increased procurement power and optimizing the general and administrative organization, processes and systems.
“This transaction will create a global leader in mission-critical flow creation and industrial technologies, and accelerate both companies’ strategic priorities of deploying talent, driving growth, expanding margins through increased efficiencies and allocating capital effectively,” said Vicente Reynal, currently CEO of Gardner Denver.
Reynal will lead the new industrial company as CEO. The company’s board will include seven directors selected by the current GDI board and three selected by Ingersoll Rand’s current board. Peter Stavros, currently chairman of Gardner Denver, will serve in the same role with the new company.
In announcing the deal, the companies said the new industrial company would have its corporate operations in Davidson, North Carolina, which is in the Charlotte area. A press release did not indicate plans for Gardner Denver’s Milwaukee operations. The company, which moved its headquarters to Milwaukee in 2014, currently has around 140 employees in the city, according to Wisconsin Economic Development Corp. records.
A spokesperson for the companies said it was too early to say how the plans will impact Milwaukee operations. Ingersoll Rand currently has its global headquarters in Ireland but its North American headquarters are in Davidson.
The companies do plan to grant all employees not already equity eligible around $150 million in stock in the new company. Gardner Denver previously granted employees $100 million in stock when it went public in 2017.
“We believe in fostering an ownership mentality, and that this drives motivation and engagement, something that has been clear in Gardner Denver’s strong performance,” Stavros said. “We look forward to offering this equity award to all eligible employees of the combined company and working together to drive the business forward to create value for all of our shareholders.”
The deal itself is structured as a “Reverse Morris Trust.” It calls for Ingersoll Rand to spin off its industrial segment to its shareholders and simultaneously merge with Gardner Denver. The remaining climate business of Ingersoll Rand will receive a $1.9 billion cash payment from the industrial company. Ingersoll Rand shareholders will also receive 210 million shares in the new company valued at $5.8 billion, giving them 50.1% ownership of the new firm.