Teledyne (NYSE: TDY) is undergoing the process of acquiring FLIR (Nasdaq: FLIR) for half-cash, half-stock.
The cash component is about US$3.7 billion.
They have a credit facility for $1.15 billion and they performed the following bond offering for $3 billion total:
$300 million aggregate principal amount of 0.650% Notes due 2023
$450 million aggregate principal amount of 0.950% Notes due 2024
$450 million aggregate principal amount of 1.600% Notes due 2026
$700 million aggregate principal amount of 2.250% Notes due 2028
$1.1 billion aggregate principal amount of 2.750% Notes due 2031
Needless to say, considering the 10-year government bond yield is around 155bps, this is cheap financing.
From their GAAP earnings, FLIR earned $1.60/share diluted in 2020 and at an acquisition price of US$56/share (assuming TDY at $390), that’s 2.9% without growth or synergies.
There’s still a bit of a merger arbitrage (about $1.30/share) which is a moving target because TDY has been gyrating since the merger announcement, but I am looking to dispose of the stock eventually once I have found a more suitable USD target for capital.