Ingersoll Rand (a provider of mission-critical flow creation and industrial solutions) announced it has agreed to acquire ILC Dover from New Mountain Capital, a leading growth-oriented investment firm with about $50 billion in assets under management. This deal includes an upfront cash purchase price of approximately $2.325 billion and an earnout linked to the achievement of select operating efficiency metrics in 2024. And at the maximum payout, the earnout increases the 17x upfront purchase multiple by less than one turn.
ILC is a leader in designing and producing innovative solutions for biopharmaceutical, pharmaceutical, and medical device markets and a leading supplier for the space industry. ILC serves its global customer base across 11 engineering and production facilities in North America, Europe, and Asia, with 2,000+ team members.
In connection with this deal, Ingersoll Rand will establish a life sciences platform within its P&ST segment, consisting of ILC plus Ingersoll Rand’s life science-focused brands, including Thomas, Welch, Zinsser Analytic, Tricontinent, Air Dimensions, and ILS.
ILC President and CEO Corey Walker will lead the life sciences platform and join the Ingersoll Rand leadership team, reporting to Vicente Reynal, chairman and chief executive officer. The platform will have about $700 million in revenue. It will enable Ingersoll Rand to focus further on its growth and investment in life sciences, a key strategic area for the company. The current P&ST segment leader Santiago Arias Duval will continue to report to Reynal and lead a second platform within P&ST consisting of the remaining P&ST businesses, representing approximately $1 billion in revenue.
This deal is accretive to Ingersoll Rand’s growth and margin rates immediately. And ILC’s revenue has grown at a mid-teens CAGR organically over the last three years and is expected to reach almost $400 million in revenue in 2024E, with mid-30s Adjusted EBITDA margins. By deploying Ingersoll Rand Execution Excellence (IRX) and organic growth enablers like Demand Generation Excellence (DGX), Ingersoll Rand expects to achieve an ROIC in the high single digits by year three of its ownership. This deal is subject to regulatory approvals and is expected to close in the second quarter of 2024.
Kirkland & Ellis is providing legal counsel to Ingersoll Rand. Jefferies and Goldman Sachs are financial advisors, and Simpson Thacher & Bartlett is providing legal counsel to ILC Dover and New Mountain Capital.
KEY QUOTES:
“This acquisition is the next phase of our long-term vision to expand into higher-growth end markets like life sciences. I am incredibly excited to partner with Corey and the outstanding team at ILC, whom we’ve admired for their innovative products and decades of experience in life sciences, to enhance our presence in key workflows and applications. We see many opportunities to leverage ILC’s established market positions and brands, including the ability to attach Ingersoll Rand’s existing liquid handling technologies and positive displacement pumps to ILC’s single-use solutions in key biopharma and pharma production processes. Through ILC, we will get access to approximately 1,000 customers in the broader life science and healthcare sectors, where we can leverage our demand generation capabilities to drive incremental growth in other Ingersoll Rand product lines like compressors. Working together, we will continue to drive sustained growth, lead customer value and innovation, and maximize value creation.”
– Vicente Reynal, Ingersoll Rand chairman and CEO
“I am very proud of our team’s passion for innovation, commitment to world-class quality, and overall dedication to our customers during a period of rapid growth. I’m excited to combine the Ingersoll Rand and ILC Life Science portfolio of products that allow us to serve our customers from the discovery phase in the laboratory to the commercial production of life saving therapies. ILC Dover’s direct channel access coupled with Ingersoll Rand’s proven growth and efficiency tools will allow us to accelerate our ability to serve customers across their workflows.”
– Corey Walker, ILC president and CEO
“Since we acquired ILC in early 2020, we have made substantial investments to support and drive growth. ILC significantly increased its manufacturing capabilities and cleanroom capacity while also driving meaningful operational initiatives to better serve its customers. We would like to thank Corey Walker and his management team for the successful partnership. Under Corey’s leadership, the business materially expanded its product set, including its portfolio of flexible, single-use solutions for sterile and aseptic manufacturing processes. We see a strong fit between Ingersoll Rand and ILC, and we are confident that Ingersoll Rand is the right partner for its next stage of growth.”
– Andre Moura, managing director at New Mountain Capital
