DEFA14A: Hillenbrand to Be Acquired by Lone Star Funds Affiliate

Hillenbrand's Board of Directors announced a definitive agreement for the company to be acquired by an affiliate of Lone Star Funds, expected to close by Q1 2026.

Summary

• Hillenbrand, Inc. has entered into a definitive agreement to be acquired by an affiliate of Lone Star Funds, a leading investment firm.
• The Board of Directors determined this acquisition to be the best path forward for Hillenbrand and all stakeholders, following a comprehensive review of strategic alternatives.
• The transaction is anticipated to close before the end of the first calendar quarter of 2026, subject to customary closing conditions.
• Until the transaction closes, Hillenbrand will continue to operate as an independent public company, with priorities focused on delivering FY26 plans and serving customers.
• Lone Star's ownership is expected to support long-term sustainable growth, expand capabilities, and create opportunities for associates.

Sentiment

Score: 8

Explanation: The announcement of a definitive acquisition agreement by a reputable investment firm, framed by management as the 'best path forward' after a strategic review, indicates a positive strategic development for the company and its stakeholders. The expectation of continued operations and growth support from the acquirer contributes to a strong positive sentiment, despite the inherent risks of any merger.

Positives

• The Board of Directors, after a comprehensive review, determined the acquisition is the 'best path forward' for the company and all stakeholders.
• Lone Star Funds has a successful track record in investing in companies in end markets similar to Hillenbrand's.
• Lone Star's ownership is expected to support efforts to drive long-term sustainable growth, expand capabilities, and create opportunities for associates.
• Management remains confident in Hillenbrand's strong position to deliver highly-engineered, mission-critical processing equipment and solutions.

Risks

• The Merger may not be consummated in a timely manner or at all.
• Inability of the parties to obtain required regulatory approvals and satisfy other closing conditions, including Hillenbrand shareholder approval.
• Occurrence of any event, change, or circumstance that could give rise to the termination of the Merger Agreement.
• The Merger Agreement may be terminated in circumstances requiring Hillenbrand to pay a termination fee.
• 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.
• 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.
• 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 (Schenck Process Food and Performance Materials, Linxis Group SAS) on Hillenbrand's business and financial performance.
• Competition in the industries in which Hillenbrand operates, including on price.
• Cyclical demand for industrial capital goods.
• Inability to recognize the benefits of any acquisition or divestiture, including potential synergies and cost savings.
• Potential adverse effects of 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 maintain relationships with personnel, customers, and suppliers.
• Risks related to diversion of management's attention from ongoing business operations due to the Merger.
• Impacts of decreases in demand or changes in technological advances, laws, or regulation on net revenues derived from the plastics industry.
• 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 and labor disruptions.

Future Outlook

The transaction is anticipated to close before the end of the first calendar quarter of 2026, subject to customary closing conditions. Until then, Hillenbrand will continue to operate as an independent public company, maintaining business as usual and focusing on FY26 plans and commitments. Lone Star's ownership is expected to support efforts to drive long-term sustainable growth, expand capabilities, and create opportunities for associates.

Management Comments

• "After careful consideration and following a comprehensive review of various strategic alternatives, the Board determined that this outcome is the best path forward for Hillenbrand and all our stakeholders."
• "We remain confident that Hillenbrand is strongly positioned to continue to deliver highly-engineered, mission-critical processing equipment and solutions through our talented teams, our market leading positions, and our differentiated technologies."
• "Your focus during this period is critical to maintaining our momentum and delivering strong results."
• "Lone Star's platform has a successful track record of investing in companies in end markets similar to Hillenbrand's. We expect their ownership will help support our efforts to drive long-term sustainable growth, expand our capabilities, and create opportunities for our associates."
• "On behalf of the Board and the Executive Management Team, I want to personally thank you for your work and resilience over these past few years as we have worked to transform our Company."

Industry Context

Hillenbrand operates in the industrial processing equipment and solutions sector. The acquisition by a private equity firm like Lone Star Funds, which invests globally in private equity, credit, and real estate, suggests a trend of private capital seeking value in established industrial companies. Lone Star's track record in similar end markets indicates a strategic fit, aiming to leverage Hillenbrand's market-leading positions and differentiated technologies for long-term growth, potentially through operational efficiencies or further market expansion under private ownership, away from public market pressures.

Legal Proceedings

• The filing mentions 'potential litigation relating to the Merger and the outcome of any such litigation' as a risk factor, but no active proceedings are detailed.

Stakeholder Impact

• Shareholders: The Board believes this acquisition is the 'best path forward' for all stakeholders, implying a beneficial outcome. Shareholder approval of the Merger Agreement is a condition for closing.
• Employees (Associates): Management expects Lone Star's ownership to 'create opportunities for our associates.' A Global Town Hall is scheduled to address employee questions and concerns.
• Customers: Management states a priority to 'continue to serve our customers with excellence' until the transaction closes.
• Suppliers/Creditors: The 'business as usual' statement implies continuity, but risks include potential adverse effects on relationships with suppliers due to the merger.

Next Steps

• Hillenbrand will file a definitive proxy statement with the SEC, which will be sent to shareholders.
• Shareholders are urged to read the proxy statement and other relevant SEC filings for important information.
• A Global Town Hall will be hosted on October 23, 2025, at 8 AM ET to address employee questions.
• Questions for the Town Hall should be submitted to Corporate.Communications@Hillenbrand.com by October 21, 2025.
• The transaction is anticipated to close before the end of the first calendar quarter of 2026, subject to customary closing conditions and regulatory approvals.
• Hillenbrand will continue to operate as an independent public company until the transaction closes, focusing on FY26 plans and commitments.

Key Dates

Recommendation

Given the definitive agreement for acquisition, the stock price is likely to trade close to the agreed-upon acquisition price, factoring in the time value and probability of closing. For existing shareholders, holding until the transaction closes is generally advisable to realize the acquisition value. For new investors, the upside potential is limited to the difference between the current market price and the acquisition price, making it less attractive for significant capital appreciation unless there's a substantial discount or a potential for a higher bid (which is not indicated here). The primary risk is the deal not closing, which is detailed in the risks section.

Keywords

Acquisition, Merger, Private Equity, Lone Star Funds, Hillenbrand, Industrial Equipment, Processing Solutions, Corporate Governance, SEC Filing