8-K: Atmus Secures $1.5B Credit, Finalizes Koch Filter Acquisition
Acquisition and Debt Financing Update
Atmus Filtration Technologies Inc. has completed its acquisition of Koch Filter Corporation and simultaneously entered into a new $1.5 billion credit facility to support its strategic expansion into industrial air filtration.
Summary
- Atmus Filtration Technologies Inc. (Atmus) has completed the acquisition of Koch Filter Corporation (Koch Filter) from Air Distribution Technologies, Inc. for approximately $450 million in cash, subject to customary purchase price adjustments.
- The acquisition establishes Atmus' industrial air filtration platform and expands its portfolio into high-growth end-markets, including commercial and industrial HVAC, data centers, and power generation.
- Atmus simultaneously entered into an amended and restated five-year $1.5 billion credit facility, consisting of a $500 million revolving credit facility and a $1 billion term loan, both maturing on January 7, 2031.
- The $1 billion term loan facility was fully drawn on the closing date to refinance the outstanding term loan facility (approximately $570 million from the previous $600 million facility), partially finance the Koch Filter acquisition, and pay related fees and expenses.
- Funds borrowed under the revolving credit facility after the closing date will be used for working capital and other general corporate purposes.
- The Koch Filter acquisition is expected to be accretive to Atmus' Adjusted EPS and Adjusted EBITDA margin in 2026 and achieve high-single-digit Return on Invested Capital (ROIC) by 2028.
Sentiment
Score: 8
Explanation: The successful completion of a strategic acquisition, coupled with securing a significantly larger and more flexible credit facility, indicates strong growth prospects and financial stability. The expected accretion to EPS and EBITDA margin, along with high ROIC, are positive indicators for future performance.
Positives
- Successful completion of the strategic Koch Filter acquisition, expanding market reach and product portfolio into high-growth industrial air filtration end-markets.
- Establishment of a new Industrial Solutions segment, indicating strategic diversification and growth.
- The acquisition is expected to be accretive to Adjusted EPS and Adjusted EBITDA margin in 2026, signaling positive financial impact.
- Anticipated achievement of high-single-digit Return on Invested Capital (ROIC) by 2028, demonstrating efficient capital deployment.
- Secured a larger and more flexible $1.5 billion credit facility, enhancing liquidity and financial flexibility.
- Refinancing of existing debt with the new term loan, potentially optimizing debt structure.
Risks
- Actual results may differ materially from expectations due to changes in global, regional, or local economic, business, competitive, market, regulatory, and other factors, many of which are beyond Atmus' control.
- Risks and uncertainties are also reflected in Part I, Item 1A, Risk Factors, and elsewhere in Atmus' Annual Report on Form 10-K for fiscal year ended December 31, 2024, and Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2025.
Future Outlook
The acquisition of Koch Filter is expected to be accretive to Atmus' Adjusted EPS and Adjusted EBITDA margin in 2026 and achieve high-single-digit Return on Invested Capital (ROIC) by 2028. The company aims to unlock growth potential and expand into industrial filtration markets.
Management Comments
- "We are excited to welcome the Koch Filter team to Atmus. Together, we are committed to unlocking our growth potential and executing our strategy of expanding into industrial filtration markets." Steph Disher, Chief Executive Officer of Atmus.
Industry Context
The acquisition of Koch Filter Corporation significantly expands Atmus' presence in the industrial air filtration sector, diversifying its portfolio beyond traditional vehicle and equipment markets. This strategic move positions Atmus to capitalize on growth opportunities in commercial and industrial HVAC, data centers, and power generation, aligning with broader industry trends towards specialized filtration solutions in critical infrastructure.
Comparison to Industry Standards
- NA The filing does not provide specific comparable companies, projects, or results to global benchmarks. It states internal expectations for accretion to Adjusted EPS and Adjusted EBITDA margin, and high-single-digit ROIC by 2028.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Senior Vice President, Strategy and President, Industrial Solutions | NA | Rakesh Gangwani | January 7, 2026 | To lead the newly established Industrial Solutions segment following the Koch Filter acquisition. |
| President, Koch Filter | NA | Mark Mattingly | January 7, 2026 | Continues to lead the Koch Filter business, reporting to Rakesh Gangwani, following the acquisition. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Guarantor Addition | Koch Filter Corporation will join as a guarantor on the Closing Date under the Credit Agreement. | January 7, 2026 | Expands the collateral base and guarantees for the new credit facility, strengthening creditor protection. |
| Investment Grade Fallaway Provision | Upon achievement of a corporate rating of BBB-/Baa3/BBBfrom at least two rating agencies, subsidiary guarantees and collateral security interests will be automatically released, unless the Opco Borrower elects otherwise. | Ongoing (conditional) | Provides potential for reduced collateral requirements and simplified corporate structure if investment grade status is achieved and maintained, offering financial flexibility. |
Legal Proceedings
- No specific new legal proceedings are disclosed. The filing contains a standard representation that there are no pending or threatened actions that could reasonably be expected to have a Material Adverse Effect or affect the legality/enforceability of Loan Documents.
Related Party Transactions
- No specific new related party transactions are detailed beyond the intercompany relationships inherent in the credit agreement (e.g., Parent Borrower guaranteeing Opco Borrower's debt) and permitted affiliate transactions as outlined in the covenants.
Stakeholder Impact
- Shareholders: Potential for increased shareholder value due to the accretive nature of the acquisition and strategic expansion into high-growth markets.
- Employees: Koch Filter employees are welcomed to Atmus, indicating integration and continued employment.
- Customers: Expanded product offerings and market reach in industrial air filtration, potentially leading to broader solutions.
- Creditors: The new, larger credit facility provides enhanced liquidity and financial flexibility for Atmus, but also increases the overall debt burden.
Next Steps
- The Koch Filter business will report into Atmus' newly established Industrial Solutions segment.
- Atmus will continue to execute its strategy of expanding into industrial filtration markets.
- The Opco Borrower has the potential to extend the maturity date of either or both credit facilities with the consent of extending lenders.
- Atmus may engage a sustainability coordinator on or prior to the first anniversary of the Closing Date to establish Key Performance Indicators (KPIs) for environmental targets, potentially leading to sustainability-linked pricing adjustments.
Key Dates
| Date | Description |
|---|---|
| November 21, 2025 | Date of the Stock Purchase Agreement for the acquisition of Koch Filter Corporation. |
| January 7, 2026 | Closing Date of the Koch Filter Corporation acquisition and effective date of the Amended and Restated Credit Agreement. |
| March, June, September, December (each year) | Quarterly interest payment dates for ABR/Daily SOFR loans and commitment fee payment dates. |
| March 31, 2026 | End of the first fiscal quarter for which quarterly financials are due within 60 days. |
| Fifth full fiscal quarter after Closing Date | Term loan amortization increases to an aggregate annual amount of 0.625% of the original principal. |
| Ninth full fiscal quarter after Closing Date | Term loan amortization increases to an aggregate annual amount of 1.250% of the original principal. |
| First anniversary of Closing Date | Earliest date for the Parent Borrower to engage a sustainability coordinator and establish Key Performance Indicators (KPIs) for environmental targets. |
| January 7, 2031 | Maturity date for both the $1.0 billion term loan facility and the $500 million revolving credit facility. |
Recommendation
strong buyThe acquisition of Koch Filter Corporation is a significant strategic move, expanding Atmus' presence in high-growth industrial filtration markets. The deal is expected to be accretive to Adjusted EPS and EBITDA margin in 2026 and achieve high-single-digit ROIC by 2028, indicating strong financial benefits. The successful refinancing with a larger credit facility provides ample liquidity and financial flexibility to support future growth initiatives. This combination of strategic expansion, positive financial outlook, and robust financing makes Atmus an attractive investment.
Keywords
Filtration, Industrial Filtration, Acquisition, Credit Facility, Term Loan, Revolving Credit, Debt Financing, HVAC, Data Centers, Power Generation, Corporate Strategy, SEC Filing
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