Gates Announces Potential Pricing for Massive IPO

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Gates Industrial has filed an amended S-1 form with the U.S. Securities and Exchange Commission (SEC) for its initial public offering (IPO). The company intends to price its 38.5 million shares in the range of $18 to $21 per share, with an overallotment option for an additional 5.78 million shares. At the maximum price, the entire offering is valued up to $929.78 million. The company intends to list its shares on the New York Stock Exchange under the symbol GTES.

The underwriters for the offering are Citigroup, Morgan Stanley, UBS Investment Bank, Barclays, Credit Suisse, Goldman Sachs, RBC Capital Markets, Blackstone Capital Markets, Deutsche Bank, Wells Fargo, Current Capital Securities, KeyBank, Siebert Cisneros Shank, SunTrust Robinson Humphrey, Academy Securities, BTIG and Guggenheim Securities.

This is a global manufacturer of innovative, highly engineered power transmission and fluid power solutions. It offers a broad portfolio of products to diverse replacement channel customers and to original equipment (first-fit) manufacturers as specified components, with the majority of its revenue coming from replacement channels.

Gates products are used in applications across numerous end markets, including construction, agriculture, energy, automotive, transportation, general industrial, consumer products and many others. Its revenue has historically been highly correlated with industrial activity and utilization and not with any single end market, given the diversification of its business and high exposure to replacement markets. Key indicators of performance include industrial production, industrial sales and manufacturer shipments.

In terms of its finances, the company said this in the filing:

During Fiscal 2016, we generated $2,747.0 million in net sales to over 8,000 customers in 128 countries, our net income was $84.3 million and our Adjusted EBITDA was $594.9 million, representing an Adjusted EBITDA margin of 21.7%, an increase of 180 basis points from Fiscal 2015. During Fiscal 2015, we generated $2,745.1 million in net sales, our net income was $50.9 million and our Adjusted EBITDA was $547.2 million, representing an Adjusted EBITDA margin of 19.9%.

Gates intends to use the net proceeds from this offering to pay down its debt, as well as for general corporate purposes.