Madison Air Solutions Corp. shares surged 10% on Tuesday after the company announced a $2.25 billion private placement to fund its planned $5 billion acquisition of German ventilation specialist ebm-papst.
The New York-listed air quality solutions provider said it agreed to sell 90.1 million Class A common shares at $24.97 each, raising gross proceeds of $2.25 billion. The equity issuance will cover the full cash equity portion of the transaction, with Goldman Sachs and Barclays acting as placement agents.
Larry Gies, Madison Air’s chairman, committed to purchasing $300 million of the shares, while Madison Solutions LLC pledged $320 million. Shares purchased by Gies and Madison Solutions are subject to transfer restrictions for one year post-closing, with limited exceptions.
The acquisition is expected to close around year-end, pending regulatory approvals and customary conditions. Madison Air plans to fund the remaining $2.8 billion of the purchase price with debt and cash, targeting a pro forma net leverage ratio of 3.7 times at closing. The company aims to reduce leverage to below 2.5 times within two years, supported by projected free cash flow.
Madison Air expects the deal to be accretive to earnings per share in the first year following completion, with synergies expected to further strengthen financial performance.
