3M to Buy Ceradyne in $860M Deal

By Matt Egan Industrials FOXBusiness

Blue-chip conglomerate 3M (MMM) unveiled a deal on Monday to scoop up advanced-ceramics maker Ceradyne (CRDN) for $860 million.

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The $35-a-share transaction carries a 43% premium on Ceradyne’s Friday closing price of $24.43.

Based in Costa Mesa, Calif., Ceradyne employs just north of 2,100 people and generates $500 million in annual sales. The company is a leader in the development and production of advanced technical ceramics used in a slew of industries, including automotive, oil and gas, solar and electronics.

However, Ceradyne’s shares have been cut in half over the past 17 months due to waning demand.

“Ceradyne is a strong company with a great reputation, world-class technology in advanced ceramics, and leadership positions in the markets it serves,” Chris Holmes, executive vice president of 3M’s industrial and transportation business, said in a statement.

3M said it expects the transaction to close during the fourth quarter and add one cent a share to the company’s bottom line in the first 12 months, excluding accounting adjustments and integration costs. The acquisition is seen hurting 3M’s EPS by 5 cents in the first year after the close.

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Ceradyne will be housed in 3M’s energy and advanced materials division within the company’s industrial and transportation business.

“This is a great fit and I know that advanced ceramics technologies have a tremendous future within 3M and can contribute to the development of unique solutions for many demanding applications,” said Ceradyne CEO Joel Moskowitz.

Credit Suisse (CS) served as 3M’s exclusive financial advisor, while Citigroup (C) advised Ceradyne.

Shares of Ceradyne surged 42.94% to $34.92 on Monday, giving them a 30% gain for the year.

3M, which is based in St. Paul, gained 0.26% to $92.66.