Kadant (KAI) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition targets a market leader in boiler efficiency and cleaning systems, expanding presence in pulp and paper, power generation, and general industrial sectors, and complements existing fiber processing lines.

• Clyde's technology aligns with sustainability and energy-saving initiatives, supporting long-term growth and enhancing the product portfolio.

• Aftermarket products represent 75% of revenue, providing a strong recurring earnings stream.

• Access to global manufacturing and sales networks expected to enhance Clyde's growth and collaboration opportunities.

• Integration of capabilities aims to provide comprehensive solutions for energy, pulp and paper, and general industry sectors.

Financial terms and conditions

• Purchase price of $175 million in cash, subject to customary adjustments.

• Clyde reported $92 million in revenue and $21.4 million adjusted EBITDA for the fiscal year ended February 28, 2025.

• EBITDA multiple of 8.2x, reduced to just below 8x after tax attributes.

• Acquisition funded primarily through revolving credit facility; $170 million financed at a rate of approximately 5.4%.

• Transaction expected to be slightly dilutive to GAAP EPS in Q4 2025 but slightly accretive on an adjusted basis.

Synergies and expected cost savings

• No synergies modeled into acquisition returns; potential manufacturing synergies from global footprint.

• Possible new market opportunities in sugar beet and sugarcane sectors through collaboration with other divisions.