Date: Oct 01, 2012 Author: Thomas Black Source: Bloomberg (
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3M Co. (MMM), the manufacturer whose new chief executive officer has said he's considering larger deals, agreed to buy Ceradyne Inc. (CRDN) for $860 million to expand into ceramics used in energy, aerospace and defense industries.
3M agreed to pay $35 a share and plans to complete the transaction by the end of the year, according to a statement today. The board of Mesa Costa, California-based Ceradyne has recommended shareholders accept the offer, which is 43 percent higher than the closing price on Sept. 28.
The purchase, the biggest announced by St. Paul, Minnesota- based 3M this year, will help the company expand into ceramics as the material becomes more popular across several industries. Ceramics are more frequently used because they are more heat- resistant and harder than metal, said Nick Heymann, an analyst with William Blair & Co. in New York.
"For 3M, this is basically a way to participate in one of the highest growth materials segment across the broadest swath of industries," said Heymann, who rates the shares market perform. "You're buying a high value-added supplier of unique technology in an above-average growth market, so you're going to pay up for that."
3M agreed to pay about 6 times Ceradyne's earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. That's similar to the 5.3 ratio of similar deals.
Ceradyne shares rose 43 percent to $34.92 at 10:23 a.m. in New York. They had declined 8.8 percent through Sept. 28. 3M rose 1.5 percent to $93.77.
