Under terms of the deal, Hanover shareholders will get 0.325 share of the new company for each Hanover share and Universal shareholders will get a share of the new company for each share of Universal they own. Hanover shareholders will end up with 53% of the new company, which is to take a new name, and Universal chief Stephen Snider will be the CEO.
"The combination of Hanover and Universal brings together two highly respected companies in the natural gas compression and production and processing equipment fabrication industry," said Snider. "Operating under a new corporate name, we will be able to fully leverage our combined capabilities to provide an enhanced level of customer support and a wider product and service offering to meet the full compression services and production and processing equipment needs of our customers worldwide."
The merger is expected to be accretive to earnings per share for stockholders of both companies in 2008 after achieving expected annualized pre-tax cost savings of approximately $50 million. These synergies are expected to arise from the closure of overlapping facilities, increased operational efficiencies and reduction of corporate overhead.