Shares of Madison Air Solutions Corp. advanced 10% on Tuesday after the company secured $2.25 billion in a private placement to partially finance its $5 billion acquisition of ebm-papst.
The company agreed to sell 90,108,130 Class A common shares at $24.97 apiece to accredited investors, with proceeds earmarked for the equity portion of the deal. Madison Solutions LLC, an affiliate of Chairman Larry Gies, committed to purchasing $320 million of the shares, while Gies himself agreed to acquire $300 million. Goldman Sachs and Barclays acted as placement agents.
The transaction is expected to close around Sept. 1, subject to customary conditions. Madison Air anticipates the acquisition will close by year-end, pending regulatory approvals.
Funding for the $5 billion purchase will combine the $2.25 billion equity raise with approximately $2.8 billion in debt and cash. Pro forma net leverage is projected at 3.7x at closing, excluding synergies, with a target of below 2.5x within two years post-close.
Shares acquired by Gies and Madison Solutions are restricted from transfer for one year following the placement’s completion. Madison Air reiterated that the deal is expected to be accretive to earnings per share in the first year after closing.
The acquisition marks Madison Air’s expansion into industrial equipment, complementing its aviation services business.
