Summary
Parker-Hannifin Corporation (PH) has filed an 8-K report on February 21, 2017, announcing the pricing of a significant private offering of senior notes. The company has priced $700 million in notes due 2027, $600 million in notes due 2047, and €700 million in notes due 2025. The primary purpose of this financing is to fund the proposed acquisition of CLARCOR, Inc., a transaction that is subject to shareholder approval and customary closing conditions. This debt issuance indicates Parker-Hannifin's strategic move to acquire CLARCOR, which is expected to be a material event for the company. Investors should note that if the acquisition does not close by December 1, 2017, or if the merger agreement is terminated, the notes will be subject to a special mandatory redemption at 101% of their principal amount, plus accrued interest. This structure provides a degree of protection for noteholders.
Key Highlights
- 1Parker-Hannifin priced a private offering of $700 million in 3.250% senior notes due 2027.
- 2The company also priced $600 million in 4.100% senior notes due 2047 and €700 million in 1.125% senior notes due 2025.
- 3The net proceeds from this offering are intended to finance the proposed acquisition of CLARCOR, Inc.
- 4The CLARCOR acquisition is subject to shareholder approval, which will be sought at a special meeting on February 23, 2017.
- 5The notes are subject to a special mandatory redemption at 101% of principal plus accrued interest if the CLARCOR acquisition does not close by December 1, 2017, or the merger agreement is terminated.
- 6The notes were offered through private transactions to qualified institutional buyers and persons other than U.S. persons, in reliance on exemptions from registration requirements.