ESAB Corporation (ESAB), a fabrication and gas control technology firm, announced that it has acquired Ohio Medical, LLC (Ohio Medical), a global player in oxygen regulators and central gas systems, from a private investor group for a cash purchase price of $127 million.
What were the executives’ thoughts on the acquisition?
Shyam P. Kambeyanda, President and CEO of ESAB, stated, “We are thrilled to welcome the Ohio Medical team to ESAB Corporation. Ohio Medical increases our served market in North America for medical oxygen regulators and central gas systems, complementing our GCE and Victor businesses, creating a gas control equipment leader with revenues of over $400m.”
“We are excited about the global cross-selling opportunities and how Ohio Medical advances our strategy to drive faster growth, higher margins, lower cyclicality, and stronger cash flow.”
Anthony Wieczorek, CEO of Ohio Medical, said, “For over 100 years, we have been a market leader in oxygen regulators and central gas systems. Joining ESAB will help us accelerate our expansion, while allowing us to harness the power of the ESAB Business System (EBX) to better serve our customers with increased efficiency and innovative customer solutions.”
What are the specifics of the transaction?
The Company also expects an additional cash tax benefit with a net present value of $15 million. During the twelve months ended August 31, 2022, Ohio Medical generated over $45 million of sales, gross margins above 40%, and adjusted EBITDA margins greater than 20%.
The acquisition is expected to be adjusted EPS accretive to ESAB in the first year. The firm financed the acquisition using cash on hand and expects its net leverage ratio to be less than 3x at the end of 2022. ESAB will provide information during its earnings on Nov 3, 2022.
Ohio Medical is headquartered in Gurnee, Illinois and employs about 100 associates, providing ESAB with strong brands and distribution in the large and attractive North American market.
Combined with ESAB Corporation’s Victor and GCE businesses, the addition of Ohio Medical creates an unmatched global medical and industrial gas control portfolio that enhances the company’s worldwide offerings. PricewaterhouseCoopers Corporate Finance LLC served as financial adviser and Tucker Ellis LLP served as legal counsel to the Company.