MTS Systems borrows under revolver to fund $80 million E2M purchase

By Devika Patel

Knoxville, Tenn., Nov. 27 – MTS Systems Corp. used borrowings under its revolver to fund its recent $80 million acquisition of E2M Technologies BV.

On Nov. 26, the company said it had acquired E2M on Nov. 21.

“We acquired E2M last Wednesday, Nov. 21, in an all-cash deal valued at approximately $80 million,” senior vice president and chief financial officer Brian T. Ross said on the company’s fourth quarter and year ended Sept. 29 earnings conference call on Tuesday.

“Total acquisition costs are expected to be approximately $1.5 to $2.5 million and we financed the acquisition through an expansion of the company’s revolving credit facility.”

As of Nov. 21, the company’s leverage ratio was about 4x, and Ross said that management forecasts the company’s leverage ratio to decline to approximately 3.5x or below by the end of fiscal 2019.

“Before this deal, we had continued to de-lever our balance sheet and reduced our debt for eight consecutive quarters,” Ross said.

Total debt was $388,378,000 as of Sept. 29, 2018, compared to $457,639,000 as of Sept. 30, 2017.

Cash and cash equivalents were $71,804,000 as of Sept. 29, 2018, compared to $108,733,000 as of Sept. 30, 2017.

MTS is an Eden Prairie, Minn.-based supplier of high-performance test systems and position sensors.

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