EnPro Industries announced that it has entered into an agreement to acquire LeanTeq, a privately-held, Taiwan-based company. "LeanTeq primarily provides refurbishment services for critical components and assemblies used in state-of-the-art semiconductor equipment. This equipment is used to produce the latest and most technologically advanced microchips for smartphones, autonomous vehicles, high-speed wireless connectivity, artificial intelligence, and other leading-edge applications." Upon completion of the acquisition, LeanTeq will be part of EnPro's Technetics Group within the Sealing Products segment. Technetics Group designs and produces custom, highly engineered components for demanding applications in the semiconductor, aerospace and nuclear markets. LeanTeq complements EnPro's existing $100M+ semiconductor presence and fits with EnPro's growth strategy communicated over the past several years. Along with the acquisition of The Aseptic Group, announced on July 2, LeanTeq represents another step towards EnPro's strategy to grow in highly attractive markets and applications. The combined purchase price of these two transactions is approximately $345M. The initial annual impact of the transactions is anticipated to include pro forma sales of approximately $55M and an increase in Sealing Products segment EBITDA margin of approximately 175-200 bps. EnPro is financing the two transactions through a combination of funds from cash, a revolving credit facility, a new term loan facility, and rollover equity from LeanTeq executives. Pro forma Net Debt to Adjusted EBITDA is expected to be approximately 2.7x at the closing of the LeanTeq transaction. EnPro's cash generation capacity is expected to provide sufficient funds for reducing net debt to within our stated long-term target range of 1.5x to 2.0x by the end of 2020. The transaction, which is subject to customary closing conditions, including regulatory approvals, is expected to close in Q4.
