June 25, 2018 / 10:16 AM / 3 months ago

UPDATE 1-Austria's Andritz buys U.S. firm Xerium for $833 mln in cash

* Andritz assumes financial liabilities of $590 mln

* Xerium seen as a good fit for Andritz

* Andritz shares gain 4.4 percent (Adds Xerox CEO, analyst, detail, shares)

VIENNA, June 25 (Reuters) - Andritz has agreed to buy U.S. machine industry company and supplier Xerium Technologies in a cash deal worth roughly $833 million, the Austrian engineering group said on Monday.

The move will enable Andritz, which makes machines and production lines for industries ranging from textiles and hydropower to steel and recycling, to strengthen its position in the paper industry, which Xerium supplies with parts and services.

Investors welcomed the deal, sending Andritz's shares up 4.4 percent, making them the top gainer in Austria's blue-chip index .

"Particularly attractive is that the products of Xerium mainly consist of wear parts needed for the ongoing production process, and therefore guarantee... recurring business, plus attractive maintenance and aftermarket service revenues," said Baader Helvea analyst Peter Rothenaicher in a note to clients.

Andritz will acquire the Youngsville, North Carolina-headquarterd company for $13.50 per share in cash, in a transaction valued at approximately $833 million, including net financial liabilities of approximately $590 million, it said.

The purchase price per share is more than double the $6.61 at which Xerium's shares closed on Friday. The American group's stock has fallen by more than 10 percent in the past 12 months.

Xerium's board of directors has already approved the deal, although Xerium's shareholders still have to do so.

"We are very excited about this coming together with Andritz," said Xerium's Chief Executive Officer Mark Staton in a statement. "I am convinced that Andritz will be a great long-term owner of Xerium."

Carl Marks Management Company and Wynnefield Capital, representing around 20 percent of outstanding Xerium stock, have already said they will vote in favour of the deal, according to Andritz.

Xerium makes and supplies machine clothing and roll covers for paper, tissue, and board machines, including maintenance and aftermarket services. It operates 28 manufacturing facilities in 13 countries, according to its website.

The American company reported an operating income of $54.8 million on sales of $481 million in 2017. Its high indebtedness, which stood at $519 million per end-March, is a problem, said Baader.

Andritz had sales of 5.9 billion euros ($6.9 billion) and a net income of 266 million euros last year. It posted net liquidity of 734 million euros, available credit lines of 145 million euros and surety lines of 5.89 billion euros end-March. ($1 = 0.8582 euros) (Reporting by Francois Murphy and Kirsti Knolle; editing by Jason Neely and Jan Harvey)

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