GATES ANNOUNCES PRICING OF SECONDARY OFFERING OF 20,000,000 ORDINARY SHARES

Rhea-AI Summary

Gates Industrial plc (NYSE: GTES) has announced the pricing of a secondary offering of 20,000,000 ordinary shares by certain selling stockholders affiliated with Blackstone Inc. The underwriters have a 30-day option to purchase up to 3,000,000 additional shares. The offering is expected to close on August 21, 2024. Gates will not receive any proceeds from the sale.

In connection with its existing share repurchase program, Gates has entered into a contract to repurchase $125 million of ordinary shares at the same price paid by the underwriters, totaling 7,539,203 shares. This repurchase is conditioned upon the closing of the offering. Additionally, one of Gates' directors has expressed interest in purchasing shares in the offering.

Positive

• Gates is repurchasing $125 million worth of shares, potentially indicating confidence in the company's value
• A company director has shown interest in purchasing shares, suggesting insider confidence

Negative

• Selling stockholders are offloading a significant number of shares, which could potentially dilute existing shareholders' ownership
• The company will not receive any proceeds from the sale of shares in the offering

Insights

Financial Analyst

The secondary offering of 20 million shares by Blackstone-affiliated stockholders signals a significant reduction in their stake in Gates. This move could potentially increase the stock's float and liquidity. The pricing details are important for investors to assess the market's valuation of Gates.

Gates' simultaneous $125 million share repurchase at the offering price is a strategic move. It demonstrates confidence in the company's value and could help offset potential downward pressure on the stock price from the large offering. This repurchase represents approximately 37.7% of the offered shares, which is substantial.

The involvement of multiple high-profile underwriters suggests strong institutional interest in the offering. However, investors should monitor how the market absorbs this large block of shares and its impact on Gates' stock price and trading volume in the short term.

Corporate Governance Expert

The secondary offering by Blackstone-affiliated stockholders could signal a shift in Gates' ownership structure and potentially its corporate governance. This reduction in Blackstone's stake may lead to changes in board composition and strategic direction over time.

The interest of a director in purchasing shares in the offering is noteworthy. While it could be seen as a vote of confidence, it also raises questions about insider participation and potential conflicts of interest. Investors should monitor any subsequent SEC filings for details on this director's purchase.

The share repurchase, while positive for remaining shareholders, should be scrutinized in the context of the company's capital allocation strategy and long-term growth plans. Investors should assess whether this use of cash is the most beneficial for the company's future prospects.

Market Dynamics Analyst

The secondary offering of 20 million shares, with an additional 3 million share option, represents a significant supply of Gates stock entering the market. This could potentially lead to short-term price pressure as the market absorbs the new shares.

However, the company's strategic $125 million share repurchase acts as a counterbalance, potentially stabilizing the stock price. The repurchase of 7,539,203 shares at the offering price demonstrates management's belief in the company's intrinsic value.

Investors should closely monitor trading volumes and price action in the days following the offering. The involvement of multiple prestigious underwriters suggests strong institutional support, which could help maintain market stability during this transition period.

DENVER, Aug. 16, 2024 /PRNewswire/ -- Gates Industrial Corporation plc (NYSE: GTES, "Gates" or the "Company") announced today the pricing of the previously announced secondary offering of 20,000,000 ordinary shares (the "Offering") by certain selling stockholders affiliated with Blackstone Inc. (the "Selling Stockholders"). The Selling Stockholders have also granted the underwriters a 30-day option to purchase up to 3,000,000 additional ordinary shares. The underwriters may offer the shares from time to time for sale in one or more transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Offering is expected to close on August 21, 2024, subject to customary closing conditions.

Gates is not offering any ordinary shares in the Offering and will not receive any proceeds from the sale of ordinary shares in the Offering. Citigroup, Goldman Sachs & Co. LLC, and Jefferies are serving as the joint lead book-running managers of, and as representatives of the underwriters for, the Offering. BMO Capital Markets, BTIG, Evercore ISI, Mizuho, Morgan Stanley, MUFG, PJT Partners, RBC Capital Markets, UBS Investment Bank and Santander are also serving as joint book-running managers for the Offering.

In addition, as previously announced, in connection with its existing share repurchase program, Gates has entered into a share repurchase contract with Citigroup Global Markets Inc. to repurchase $125 million of ordinary shares at a price per share equal to the price paid by the underwriters in the Offering, for a total of 7,539,203 ordinary shares, and has advised Citigroup Global Markets Inc. to purchase such shares from the Selling Stockholders. The share repurchase is expected to be consummated promptly following the Offering and is conditioned upon the closing of the Offering. The closing of the Offering is not conditioned upon the consummation of the share repurchase.

One of our directors has indicated an interest in purchasing ordinary shares in the Offering.

The Company has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (the "SEC") for the Offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the Offering. You may get these documents for free by visiting EDGAR on the SEC's website at www.sec.gov. Alternatively, the Company, any underwriter or any dealer participating in the Offering will arrange to send you the prospectus if you request it by contacting Citigroup, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717 (Tel: 800-831-9146); Goldman Sachs & Co. LLC, Attn: Prospectus Department, 200 West Street, New York, NY 10282 (Tel: 866-471-2526) or by e-mail at prospectus-ny@ny.email.gs.com; or Jefferies LLC, Attn: Equity Syndicate Prospectus Department, 520 Madison Avenue, New York, NY 10022 (Tel: 877-821-7388) or by email at prospectus_department@jefferies.com. 

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Gates:
Gates is a global manufacturer of innovative, highly engineered power transmission and fluid power solutions. Gates offers a broad portfolio of products to diverse replacement channel customers, and to original equipment ("first-fit") manufacturers as specified components. Gates participates in many sectors of the industrial and consumer markets. Our products play essential roles in a diverse range of applications across a wide variety of end markets ranging from harsh and hazardous industries to everyday consumer applications including virtually every form of transportation. Our products are sold in more than 130 countries across our four commercial regions: the Americas; Europe, Middle East & Africa; Greater China; and East Asia & India.

Forward‐Looking Statements and Information:
This press release contains forward-looking statements, which involve risks and uncertainties. Forward-looking statements include all statements that are not historical facts. In some cases you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "predicts," "intends," "trends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Forward-looking statements are based on the Company's current expectations and actual results may differ materially. Other risks and uncertainties are more fully described in the section entitled "Item 1A. Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 2023, as filed with the SEC, as such factors may be updated from time to time in the Company's periodic filings with the SEC. Investors are urged to consider carefully the disclosure in our filings with the SEC, which are accessible on the SEC's website at www.sec.gov. Gates undertakes no obligation to update or supplement any forward-looking statements as a result of new information, future events or otherwise, except as required by law.

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SOURCE Gates Industrial Corporation plc

FAQ

How many shares are being offered in Gates Industrial 's (GTES) secondary offering?

Gates Industrial (GTES) is offering 20,000,000 ordinary shares in the secondary offering, with an option for underwriters to purchase up to 3,000,000 additional shares.

When is the expected closing date for Gates Industrial 's (GTES) secondary offering?

The secondary offering for Gates Industrial (GTES) is expected to close on August 21, 2024, subject to customary closing conditions.

How many shares is Gates Industrial (GTES) repurchasing in connection with the offering?

Gates Industrial (GTES) is repurchasing 7,539,203 ordinary shares for $125 million at the same price paid by the underwriters in the offering.

Will Gates Industrial (GTES) receive any proceeds from the secondary offering?

No, Gates Industrial (GTES) will not receive any proceeds from the sale of ordinary shares in the secondary offering.