The purchase of MEI is contingent upon regulatory approvals and customary closing conditions. Crane Co. said that it intends to finance the acquisition through a combination of cash on hand and additional debt. Commitments are in place to cover 100% of the financing needs in order to facilitate the closing of the transaction, which is expected to be in the second quarter of 2013.
Crane’s Payment Solutions business has annual sales of $175 million with operating profit margins of approximately 14%. Crane acquired NRI, a niche European coin validation and dispensing business, in 1985 as part of the acquisition of UniDynamics Corporation. In recent years Crane has invested over $220 million to grow and broaden the payment solutions portion of its Merchandising Systems business segment. Cash Code, which specializes in niche applications for bill validation and dispensing devices, and Telequip, which provides coin dispensing equipment, were both acquired in 2006, substantially expanding the capabilities of NRI’s coin handling business. Money Controls, acquired in late 2010, produces a broad range of payment solutions for coins and bills, and further broadened the scope and scale of the business.
Until the completion of this acquisition, MEI and Crane Payment Solutions will operate independently under their existing management structures. Following the acquisition, it is anticipated that Michael Hayes, President of MEI, will become president of the combined payment solutions businesses, headquartered in Malvern, PA. Mr. Hayes will report to Max Mitchell, Executive Vice President and COO of Crane. Kurt Gallo, President of Crane Payment Solutions, will assume the Chief Operating Officer role of the combined businesses, reporting to Mr. Hayes. Kiyoaki Takeda will continue as President of MEI Conlux Holdings (Japan). Brad Ellis, President of Crane’s Vending Solutions business will continue to report directly to Max Mitchell.
2012 EPS and Free Cash Flow Guidance ReaffirmedThe Company continues to expect 2012 EPS to be in the lower half of the previously communicated guidance range of $3.75 - $3.85, excluding Special Items. The EPS guidance includes $0.04 associated with the first half profits from discontinued operations, but excludes the following Special Items: the gain from the previously announced sale of two businesses ($0.33 per share) and repositioning costs ($0.26 per share). The 2012 EPS guidance also assumes a $0.05 per share benefit associated with a potential retroactive application of the Research and Development tax credit still under consideration in Congress. Full year 2012 free cash flow (cash provided by operating activities less capital spending) remains in a range of $150 - $180 million.