Mori Seiki to Increase Gildemeister Stake in Exclusive Stock Sale

New share issuance will raise over $100 million for cutting machine builder

Mori Seiki is set to increase its stake in Germany's Gildemeister AG, nearly two years after the two groups formed a cross-shareholding relationship that resulted in a combination of their commercial efforts in the U.S. and other global markets.

Various press reports indicate that Gildemeister AG’s directors agreed to issue new common shares that will be sold exclusively to Mori Seki, increasing total shares by about 10%.

Gildemeister plans to use the revenues from the share increase, along with another similar measure to follow, to cut financial liabilities.

Mori Seiki will pay 18.22 euros ($25.33) per share in cash for the new shares, according to a Gildemeister statement, which the German group said represents a 20-percent premium to the volume weighted average share price of the past 10 trading days. It estimated it would raise 83 million euros ($116 million) by the sale.

The second issuance that Gildemeister plans will take place in the near future, and Mori Seiki will participate again. That effort is projected to represent a 20% increase in Gildemeister shares, though the value of the transaction is not yet determined.

Mori Seiki already holds a 5% stake in Gildemeister, and Gildemeister holds a 5% share in Mori Seiki, according to their 2009 “business and capital collaboration” agreement.

Mori Seiki designs and builds CNC lathes, multi-axis turning centers, vertical and horizontal machining centers, and develops application systems. Gildemeister AG is a holding company for the DMG, Deckel Maho, Gildemeister products, which include turning and milling technology, along with control systems.

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