ESCO Technologies (ESE) investor relations material

Deal rationale and strategic fit

• Acquisition creates a leading global provider of utility solutions with a highly differentiated and complementary portfolio, expanding capabilities and scale in serving global utility customers.

• Advances technology offerings, expands exposure to high-growth, high-margin end markets, and supports a strategic shift toward technology-led leadership.

• Megger's strong brand, 130-year heritage, and blue-chip customer base in the UK and EU align with strategic goals and broaden the portfolio.

• Megger brings differentiated software and analytics capabilities, complementing existing business.

• The combination positions the company to support utilities facing rising electric demand and grid modernization.

Financial terms and conditions

• Purchase price is $2.35 billion: over $900 million in cash and $1.4 billion in equity.

• Cash funded through existing cash and incremental debt with committed financing; equity issued at ~$280/share via VWAP for just over 5 million shares.

• Transaction valued at ~14x 2026 expected synergized EBITDA.

• TBG will own ~16% of the company and have nomination rights for one board seat, with a lock-up period for equity release.

• Leverage ratio expected at 2.5x EBITDA or less at close, targeting below 2x within 12 months or by end of FY'27.

Synergies and expected cost savings

• $60 million in cost synergies expected over three years, mainly from manufacturing, sourcing, and SG&A savings.

• Run-rate cost synergies expected to expand adjusted EBITDA margin by 300 basis points.

• R&D and go-to-market efficiencies anticipated.