The 3M Company said on Monday that it planned to buy Ceradyne, a ceramics maker, for $860 million in cash, in the manufacturer's biggest deal in two years.
Ceradyne shareholders will receive $35 a share in cash, a 43 percent premium to the company's Friday closing price, through a tender offer that is expected to begin within the next two weeks.
(Excluding cash and equivalents, 3M values the transaction at about $670 million.)
By buying Ceradyne, 3M is hoping to bolster its advanced materials division and its offerings for the transportation, energy and defense industries. The transaction is expected to dilute its earnings by 5 cents a share for the first 12 months after closing.
Shares in Ceradyne surged 43 percent in premarket trading on Monday, to $34.95.
Monday's deal is 3M's biggest takeover since its purchase of Cogent, a maker of fingerprint identification systems, in Aug. 2010 for $943 million. Including Ceradyne, the company has annou nced four deals this year, its slowest for mergers activity since 2009.
Another deal announced earlier this year, the $550 million purchase of Avery-Denison's office products unit, remains in limbo after the Justice Department threatened to block the transaction on antitrust grounds. 3M and Avery-Denison have said that they are working to resolve the government's concerns.
Credit Suisse advised 3M on Monday's transaction, while Citigroup was the investment banker to Ceradyne.
