Methode Electronics to acquire Grakon
Methode Electronics announced that it has entered into a definitive agreement to acquire Grakon Parent, a global leader in the design, development and manufacture of advanced lighting systems, controls and components for premier OEM manufacturers in the heavy truck, bus, rail, electric vehicle and power sports markets. For the trailing 12 months as of July 31, 2018, Grakon's revenue was approximately $159M and EBITDA was approximately $41M. Excluding pre-tax costs related to the transaction, Methode expects the acquisition to be accretive to earnings, inclusive of estimated amortization and interest expense of $15M-$20M, in its current fiscal year ending April 27, 2019. Methode expects to fund the total consideration of approximately $420M with a combination of cash on hand and committed debt financing. Methode intends to utilize approximately $140M of cash on hand and has entered into a debt commitment agreement with certain lenders, pursuant to which the lenders have committed to make available to Methode at closing a $250M term loan facility and a $200M revolving credit facility, which will replace Methode's existing revolving credit facility. The transaction is not subject to a financing condition. Methode anticipates pre-tax acquisition and related costs in the range of $23M-$26M, which include financing, legal, insurance, due diligence, environmental and financial advisory expenses and the impact of performance-based stock award amortization. Methode expects to update its FY19 guidance to include the acquisition of Grakon when the third-party valuation is finalized, a further analysis of projected income is complete and transaction costs are settled.