SPX secures US$500m of M&A funding
SPX Technologies reloaded its balance sheet with US$500m from a marketed follow-on offering following a string of acquisitions.
After marketing for one day on Tuesday, Bank of America, JP Morgan, Wells Fargo, TD Cowen and Truist Securities priced 2.66m shares at US$188, a 1.6% discount to the closing price of US$191.17 and 6.2% file to offer.
Despite being four-times covered, the banks allocated tightly with 50% of the offering going to 10 institutional investors and 70% with the top 20, a top-heavy book skewed towards a few new and long-only institutions as well as existing shareholders
The HVAC equipment supplier closed Wednesday at US$191.88.
SPX has built its business on a string of acquisitions. In April, the company closed its US$144m purchase of Toronto-based Sigma Heating and Cooling and Omega Heat Pump (Sigma & Omega).
The company had US$882m of net debt following the Sigma & Omega purchase, putting leverage at 1.7 times. SPX is using the proceeds to repay debt, clearing the way for it to close other deals in its M&A pipeline.
“I'd say our pipeline is very robust,” said SPX CEO Eugene Lowe on the company’s second-quarter earnings call on July 31. “Not only now for what we see and what we're actively working on, but also for what we see coming out over the next 12 months.”
Lowe also said during the earnings call that he expected to finish 2025 levered at 1.5 times without having to raise outside capital.