DEFA14A: Hillenbrand to be Acquired by Lone Star Funds

Hillenbrand's Board of Directors has agreed to an acquisition by an affiliate of Lone Star Funds, with the transaction expected to close by the end of the first calendar quarter of 2026.

Summary

• Hillenbrand, Inc. has entered into a definitive agreement to be acquired by an affiliate of Lone Star Funds.
• The Board of Directors determined this transaction is the best path forward for the company and its shareholders.
• The transaction is expected to close by the end of the first calendar quarter of 2026, subject to customary closing conditions and approvals.
• Upon closing, Hillenbrand will be delisted from the New York Stock Exchange (NYSE) and will become a privately held company.
• Lone Star Funds initiated the proposal that led to the announced transaction.
• No immediate changes are expected for day-to-day roles, compensation, benefits, leadership, or current hiring processes for Hillenbrand associates.
• Hillenbrand will continue to operate as a separate and independent company until the transaction closes.
• The company's key business priorities and growth plans, including leadership positions in performance materials, food, and recycling, are expected to continue under new ownership.
• Megan Walke will continue in her role as Hillenbrand's Interim-CFO.

Sentiment

Score: 7

Explanation: The filing presents the acquisition as a positive strategic move for Hillenbrand and its shareholders, with management emphasizing continuity for employees and customers. While there are inherent risks in any merger, the overall tone is optimistic about future growth under new ownership. The delisting, however, removes public equity upside.

Positives

• Lone Star recognizes the quality of Hillenbrand's business, including its dedicated team, strong brands, market-leading positions, and differentiated products.
• Lone Star sees an attractive opportunity to make a significant investment to accelerate growth and execution of ongoing initiatives.
• The Board of Directors believes the transaction is the best path forward for the company and in the best interest of Hillenbrand and its shareholders.
• The acquisition is expected to strongly position the company to continue delivering highly-engineered, mission-critical processing equipment and solutions.
• Lone Star has a successful track record of investing in companies in end markets similar to Hillenbrand's.
• Hillenbrand intends to continue growing its leadership positions in key strategic end-markets such as performance materials, food, and recycling, which have good long-term growth prospects.

Negatives

• Hillenbrand will be delisted from the NYSE and become a privately held company, ending its public trading status.
• The transaction is subject to various risks, including the possibility it may not be consummated in a timely manner or at all.
• There is a risk of potential litigation relating to the Merger.
• Contractual restrictions under the Merger Agreement may limit Hillenbrand's ability to pursue other business opportunities or strategic transactions.
• Significant transaction costs are associated with the Merger, and it may be more expensive to complete than anticipated.
• The company faces risks from competitors' responses to the Merger announcement.

Risks

• The Merger may not be consummated in a timely manner or at all.
• Inability of the parties to obtain required regulatory approvals for the Merger and satisfy other closing conditions, including shareholder approval.
• Occurrence of any event, change, or circumstance that could give rise to the termination of the Merger Agreement.
• Hillenbrand may be required to pay a termination fee if the Merger Agreement is terminated under certain circumstances.
• Relevant affiliates of Lone Star Funds may fail to obtain the necessary financing to complete the Merger on a timely basis or at all.
• Potential litigation relating to the Merger and the outcome of any such litigation.
• Potential adverse impact on Hillenbrand of contractual restrictions under the Merger Agreement that limit its ability to pursue business opportunities or strategic transactions.
• Risks relating to significant transaction costs associated with the Merger and the possibility that it may be more expensive to complete than anticipated.
• Competitors' responses to the Merger.
• Global market and economic conditions, including continued volatility in financial markets, tariffs, and changed trade policies.
• Risk of business disruptions associated with information technology, cyber-attacks, or catastrophic losses affecting infrastructure.
• Increasing competition for highly skilled and talented workers, as well as labor shortages.
• Closures or slowdowns and changes in labor costs and labor difficulties.
• Uncertainty related to environmental regulation and industry standards, as well as physical risks of climate change.
• Increased costs, poor quality, or unavailability of raw materials or certain outsourced services and supply chain disruptions.
• Economic and financial conditions including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets.
• Uncertainty in U.S. global trade policy and risks with governmental instability in certain parts of the world.
• Hillenbrand's level of international sales and operations.
• Negative effects of past acquisitions, including Schenck Process Food and Performance Materials business and Linxis Group SAS acquisitions, on Hillenbrand's business, financial condition, results of operations and financial performance.
• Competition in the industries in which Hillenbrand operates, including on price.
• Cyclical demand for industrial capital goods.
• The ability to recognize the benefits of any acquisition or divestiture, including the sale of the Milacron injection molding and extrusion business, including potential synergies and cost savings or the failure to achieve plans and objectives generally.
• Potential adverse effects of the announcement or results of the Milacron disposition or the announcement or pendency of the Merger, or any failure to complete the Merger, on the market price of Hillenbrand's common stock or on its ability to develop and maintain relationships with personnel, customers, suppliers, and others.
• Risks related to diversion of management's attention from ongoing business operations due to the disposition or the Merger.
• Impacts of decreases in demand or changes in technological advances, laws, or regulation on net revenues derived from the plastics industry.
• The impact to Hillenbrand's effective tax rate of changes in the mix of earnings or in tax laws and certain other tax-related matters.
• Exposure to tax uncertainties and audits.
• Involvement in claims, lawsuits, and governmental proceedings related to operations.
• Uncertainty in the U.S. political and regulatory environment.
• Adverse foreign currency fluctuations.
• Labor disruptions.

Future Outlook

The transaction is expected to close by the end of the first calendar quarter of 2026, at which point Hillenbrand will become a privately held company and be delisted from the NYSE. Management anticipates no immediate changes to day-to-day operations, compensation, benefits, or leadership. The company plans to continue its strategy of growing leadership positions in key strategic end-markets such as performance materials, food, and recycling, with Lone Star aiming to foster continued growth and innovation.

Management Comments

• The Board determined this transaction is the best path forward for the Company and in the best interest of Hillenbrand and its shareholders.
• The Board and the leadership team believe this strongly positions the Company to continue delivering highly-engineered, mission-critical processing equipment and solutions for customers.
• We do not expect you to see any changes to your day-to-day role as a result of today's announcement. Hillenbrand will continue to operate as a separate and independent company.
• We will continue to focus on serving our customers and doing what is right for Hillenbrand, our associates, and all our stakeholders.
• Hillenbrand's key business priorities remain the same and we expect that to continue. We intend to continue to grow our leadership positions in key strategic end-markets.
• We must continue to operate with financial discipline.
• Lone Star has said it will seek to foster the continued growth and innovation at the company.
• As of today, nothing changes with how we operate, and we all need to remain focused on providing exceptional service to our customers and each other.

Industry Context

This acquisition reflects a broader trend of consolidation within the industrial processing equipment sector, where private equity firms like Lone Star Funds are actively investing in established companies with strong market positions and differentiated products. The focus on strategic end-markets such as performance materials, food, and recycling aligns with long-term growth prospects in these industries, indicating a strategic play for sustained value creation in specialized industrial niches.

Legal Proceedings

• Potential litigation relating to the Merger is identified as a risk.

Stakeholder Impact

• Shareholders: Will receive consideration for their shares as the company transitions to private ownership, with the Board believing this is in their best interest.
• Associates (Employees): No immediate changes to day-to-day roles, compensation, benefits, or leadership are expected, with Lone Star aiming to foster continued growth and innovation.
• Customers, Suppliers, and Business Partners: Business will continue as usual, with no expected impact on orders or relationships, and a continued commitment to high-quality products and services.

Next Steps

• Hillenbrand will file a definitive proxy statement with the U.S. Securities and Exchange Commission (SEC).
• Shareholders of Hillenbrand will vote on the proposed Merger Agreement.
• The parties must obtain all required regulatory approvals.
• All other customary closing conditions for the transaction must be satisfied.
• The transaction is anticipated to close by the end of the first calendar quarter of 2026.
• More details regarding operations under new ownership are expected to be shared closer to the transaction close.

Key Dates

Recommendation

The company is being acquired by a private equity firm and will be delisted from the NYSE. For current shareholders, the primary action is to await the merger's completion to receive the agreed-upon consideration for their shares. For new investors, there will be no public equity opportunity post-acquisition, making a 'sell' recommendation appropriate for those holding or considering an investment in the public entity.

Keywords

Hillenbrand, Lone Star Funds, Acquisition, Merger, Industrial Equipment, Processing Solutions, Private Equity, NYSE Delisting, Corporate Governance, Strategic Alternatives