Crane Merchandising Systems/Automatic Products

Crane Co. To Acquire MEI Conlux Holdings for $820 Million

Crane Co., a diversified manufacturer of highly engineered industrial products, announced today that it has signed an agreement to purchase 100 percent of the equity interests in MEI Conlux Holdings, Inc. and its affiliate MEI Conlux Holdings, Inc. from Bain Capital and Advantage Partners.

The purchase price is approximately $820 million on a cash free and debt free basis, representing 9.6 times MEI's estimated 2012 EBITDA of $85 million. MEI, a leading provider of payment solutions for unattended transaction systems, serves customers in the transportation, gaming, retail, service payment and vending markets. Headquartered in Malvern, Pa., and with sales of approximately $400 million in 2012, MEI has customers in over 100 countries and employs 820 people worldwide.

From 2009 to 2012, MEI sales have grown at a 13 percent compound annual growth rate and EBITDA margins have increased to 21 percent. On a pro forma basis, the combined sales of MEI and Crane Payment Solutions will be approximately $575 million in 2012.
Eric Fast, president and chief executive officer of Crane Co., said in a prepared statement, "This acquisition is consistent with our strategy of niche market leadership. MEI is an outstanding business and a leader in the payment solutions industry, with a solid product portfolio, excellent technology and sophisticated hardware and software. MEI materially strengthens our existing Payment Solutions business, which we have grown through three acquisitions beginning in 2006. Together we will be able to offer our customers a complete product suite utilizing MEI's leadership in bill validation and Crane's leadership in coin handling. We will have the global scale to capitalize on key growth opportunities, especially in emerging markets. In addition, we will expand our capabilities to drive innovation and facilitate the integration of bills, coins and cashless payment options to better serve customers worldwide. Excluding inventory step-up and one-time transaction costs, we expect MEI to be accretive to earnings within the first year of acquisition by approximately $.25 per share, including $.05 in synergies. We expect synergies to grow to $25 million  annually on a pre-tax basis, or $.30 per share in 2015."

The purchase of MEI is contingent upon regulatory approvals and customary closing conditions. Crane Co. said that it intends to finance the acquisition through a combination of cash on hand and additional debt. Commitments are in place to cover 100 percent
of the financing needs in order to facilitate the closing of the transaction, which is expected to be in the second quarter of 2013.
Crane's Payment Solutions business has annual sales of $175 million with operating profit margins of approximately 14 percent.
Crane acquired NRI, a niche European coin validation and dispensing business, in 1985 as part of the acquisition of UniDynamics Corporation. In recent years Crane has invested over $220 million to grow and broaden the payment solutions portion of its Merchandising Systems business segment. Cash Code, which specializes in niche applications for bill validation and dispensing devices, and Telequip, which provides coin dispensing equipment, were both acquired in 2006, substantially expanding the capabilities of NRI's coin handling business. Money Controls, acquired in late 2010, produces a broad range of
payment solutions for coins and bills, and further broadened the scope and scale of the business.
Until the completion of this acquisition, MEI and Crane Payment Solutions will operate independently under their existing management structures. Following the acquisition, it is anticipated that Michael Hayes, president of MEI, will become president of the combined payment solutions businesses, headquartered in Malvern, Pa. Hayes will report to Max Mitchell, executive vice president and COO of Crane. Kurt Gallo, president of Crane Payment Solutions, will assume the chief operating officer role of the combined businesses, reporting to Hayes. Kiyoaki Takeda will continue as president of MEI Conlux Holdings (Japan). Brad Ellis, president of Crane's Vending Solutions business will continue to report directly to Max Mitchell.

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