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Why Shares of Gardner Denver Jumped Today

Timothy Green, The Motley Fool

What happened

Shares of Gardner Denver Holdings (NYSE: GDI) rose on Monday after The Wall Street Journal reported the provider of compressors, blowers, and vacuum pumps is close to a deal to merge with a division of Ingersoll-Rand (NYSE: IR). Shares of Gardner Denver were up about 15% at 12:00 p.m. EDT, while shares of Ingersoll-Rand had risen about 6.1%.

So what

Gardner Denver and Ingersoll-Rand are reportedly close to a deal that will create a company with an enterprise value of roughly $15 billion, including debt. A Reverse Morris Trust arrangement would be used, allowing Ingersoll-Rand to combine a division with Gardner Denver in a tax-efficient way.

A notepad drawing of a fish eating a smaller fish.

Image source: Getty Images.

This news comes soon after Ingersoll-Rand announced the $1.45 billion acquisition of Precision Flow Systems.

Ingersoll-Rand shareholders would receive a mix of cash and stock, and they would own a bit more than half of the new company. Vicente Reynal, the CEO of Gardner Denver, will reportedly lead the new company. Other terms of the proposed deal are still unknown.

Now what

A deal is still not a sure thing. KKR & Co, the private-equity company that owns part of Gardner Denver, didn't immediately respond to a request to comment from Reuters, and Ingersoll-Rand declined to comment.

If the two companies do come to an agreement, shareholders should know about it soon.

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends KKR. The Motley Fool has a disclosure policy.