Dallas, Texas 07/28/2015 (Financialstrend) – Columbus McKinnon Corp. (NASDAQ:CMCO) has a reached an agreement that will see it acquire Magnetek Inc (NASDAQ:MAG) for a total value of $188.9 million. Magnetek stock was rallying by highs of 53% on the announcement of the deal, consequently hitting highs of $50 a share from previous lows of $32.35 a share.
All Cash Transaction
The deal is an all-cash transaction that Columbus McKinnon plans to finance through cash and credit. The company has been on an acquisition streak having already purchased a privately owned German manufacturer for $30 million. Columbus McKinnon is a manufacturer and marketer of material handling products.
Magnetek designs and manufactures power and motion control solutions notably used for handling materials, elevators as well as for mining applications. Magnetek Inc (NASDAQ:MAG) is the largest supplier of digital drivers, radio controls as well as software and accessories mostly used for industrial cranes and hoists.
Magnetek Inc (NASDAQ:MAG) also produces digital direct current motion control systems normally used on elevators. The merger deal has already been approved by the company’s board of directors. Columbus McKinnon CEO expects the transaction to combine Magnetek’s technology with Columbus products. The result should be the creation of new market opportunities that both companies can benefit from.
Class Action Lawsuit
Magnetek Inc (NASDAQ:MAG) merges with Columbus McKinnon with its 340 employees having generated sales of $112.2 million over the past year. The company’s CEO, Peter McCormick is to retain his position following the acquisition as he spearheads efforts to integrate the two companies operations. Columbus McKinnon CEO, Timothy Tevenes, believes the deal accelerate the company’s effort geared towards attaining $1 billion in annual revenue
The merger has already prompted a class action lawsuit from some law firms that continue to question the agreed purchase price. The plaintiffs argue that the $50 a share purchase price represents a small premium over analysts price target of $45 per share
