Fortive Announces Pricing of Offering of Euro-denominated Senior Notes

Rhea-AI Summary

Fortive Corporation (FTV) announced a registered offering of €500 million aggregate principal amount of its 3.700% Notes due 2026 and €700 million aggregate principal amount of its 3.700% Notes due 2029. The company intends to use the net proceeds to refinance outstanding indebtedness and for general corporate purposes. The sale of the notes is expected to close soon.

Financial Analyst

The pricing of Fortive Corporation's €500 million and €700 million notes is a strategic financial move aimed at optimizing the company's capital structure. The fixed interest rate of 3.700% for both tranches is particularly noteworthy in the current economic environment where interest rates are subject to volatility due to inflationary pressures and central bank policies. The use of proceeds to refinance existing debt, especially those associated with recent acquisitions such as EA Elektro-Automatik Holding GmbH, suggests a proactive approach to managing the company's debt profile and potentially reducing interest expenses.

Investors should consider the implications of this debt offering on the company's leverage ratios and interest coverage metrics. The decision to list the notes on the New York Stock Exchange could enhance liquidity and provide a broader investor base, potentially leading to more favorable borrowing terms in the future. However, the market's reception to these notes will depend on the perceived creditworthiness of Fortive and the prevailing market interest rates.

Market Research Analyst

Fortive's choice to refinance its indebtedness can be seen as a strategic move to capitalize on the current interest rate environment before potential rate hikes, which could increase borrowing costs. The offering's size and the decision to target both a medium-term (2026) and a longer-term (2029) maturity may indicate Fortive's confidence in its future cash flows and its ability to meet financial obligations over different time horizons.

The refinancing of debt related to the acquisition of EA Elektro-Automatik Holding GmbH is indicative of Fortive's continued integration of its acquisitions and the optimization of its financial strategy post-acquisition. This move could be perceived positively by the market as it reflects prudent financial management and a focus on maintaining a healthy balance sheet. Stakeholders should monitor the impact of this offering on Fortive's financial flexibility and its ability to pursue further growth opportunities.

Debt Capital Markets Expert

Fortive Corporation's issuance of notes in the European debt capital markets is a significant development, especially given the dual-tranche structure with the same interest rate for both maturities. This reflects a carefully calibrated approach to match the company's debt repayment schedule with its operational cash flows and investment plans. It also indicates Fortive's assessment of investor appetite for corporate debt within the Eurozone, which has been influenced by the European Central Bank's monetary policy.

The decision to apply for listing on the New York Stock Exchange is a strategic one, potentially aiming to enhance the notes' liquidity and appeal to a global investor base. This could also be a hedge against currency risk, considering the notes are denominated in euros while Fortive operates globally. The success of this offering will depend on Fortive's credit rating, investor sentiment and global economic conditions, which influence demand for corporate debt securities.

EVERETT, Wash.--(BUSINESS WIRE)-- Fortive Corporation (“Fortive”) (NYSE: FTV) today announced that it has priced its registered offering (the “offering”) of €500 million aggregate principal amount of its 3.700% Notes due 2026 (the “2026 notes”) and €700 million aggregate principal amount of its 3.700% Notes due 2029 (the “2029 notes” and, together with the 2026 notes, the “notes”). The 2026 notes will bear interest at 3.700% per annum and mature on February 13, 2026, and the 2029 notes will bear interest at 3.700% per annum and mature on August 15, 2029. Interest on the 2026 notes will be paid annually in arrears on February 13 of each year, beginning on February 13, 2025 and interest on the 2029 notes will be paid annually in arrears on August 15 of each year, beginning on August 15, 2024. Fortive intends to use the net proceeds of the offering to refinance outstanding indebtedness, which may include borrowings under its U.S. dollar-denominated commercial paper program and/or its term loan credit agreement, and for general corporate purposes. The indebtedness Fortive intends to refinance is primarily associated with the funding of the acquisition of EA Elektro-Automatik Holding GmbH. Fortive intends to apply to list the notes on the New York Stock Exchange. The sale of the notes is expected to close on or about February 13, 2024, subject to customary closing conditions.

BNP Paribas and Morgan Stanley & Co. International plc are acting as joint book-running managers for the offering of the notes.

This offering is being made only by means of a prospectus supplement and the accompanying prospectus related to the offering of the notes (collectively, the “prospectus”). The notes will be issued pursuant to an effective shelf registration statement on Form S-3 previously filed with the U.S. Securities and Exchange Commission (the “SEC”). Before you invest, you should read the prospectus and other documents Fortive has filed with the SEC for more complete information about Fortive and this offering. The preliminary prospectus has been, and the final prospectus will be, filed with the SEC and are and will be available on the SEC’s website at www.sec.gov. Alternatively, copies of the preliminary prospectus and, when available, the final prospectus related to this offering may be obtained by contacting BNP Paribas at 1-800-854-5674 or Morgan Stanley & Co. International plc at 1-866-718-1649.

This press release is for informational purposes only and shall not constitute an offer to sell or a solicitation of an offer to buy the notes or any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

ABOUT FORTIVE

Fortive is a provider of essential technologies for connected workflow solutions across a range of attractive end-markets. Fortive’s strategic segments - Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions - include well-known brands with leading positions in their markets. Fortive’s businesses design, develop, service, manufacture, and market professional and engineered products, software, and services, building upon leading brand names, innovative technologies, and significant market positions. Fortive is headquartered in Everett, Washington and employs a team of more than 18,000 research and development, manufacturing, sales, distribution, service and administrative employees in more than 50 countries around the world. With a culture rooted in continuous improvement, the core of Fortive’s operating model is the Fortive Business System.

FORWARD-LOOKING STATEMENTS

The release contains information about future expectations, plans and prospects of Fortive’s management that constitute forward-looking statements within the meaning of the U.S. federal securities laws, including statements with respect to Fortive’s expectations to complete the proposed offering and its intended use of proceeds therefrom. There can be no assurance that Fortive will be able to complete the proposed offering on the anticipated terms, or at all. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including, but not limited to, the terms of the offering, risks and uncertainties related to whether or not Fortive will consummate the offering, Fortive’s ability to list the notes or maintain the listing of the notes on the New York Stock Exchange, the impact of general economic, industry, market or political conditions and other factors that are discussed in Fortive’s SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2022 and its Quarterly Reports on Form 10-Q and other documents periodically filed with the SEC, all of which are available on the SEC’s website at www.sec.gov. These forward-looking statements speak only as of the date of this release, and Fortive does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240208065436/en/

Elena Rosman

Investor Relations

Fortive Corporation

6920 Seaway Boulevard

Everett, WA 98203

Telephone: (425) 446-5000

Source: Fortive Corporation

What is the purpose of Fortive Corporation's (FTV) registered offering?

The purpose of the registered offering is to refinance outstanding indebtedness and for general corporate purposes.

What is the interest rate on the 2026 notes?

The 2026 notes will bear interest at 3.700% per annum.

When will the 2029 notes mature?

The 2029 notes will mature on August 15, 2029.

What does Fortive Corporation (FTV) intend to do with the net proceeds of the offering?

Fortive intends to use the net proceeds to refinance outstanding indebtedness, which may include borrowings under its U.S. dollar-denominated commercial paper program and/or its term loan credit agreement, and for general corporate purposes.

What is the primary purpose of refinancing the indebtedness?

The indebtedness Fortive intends to refinance is primarily associated with the funding of the acquisition of EA Elektro-Automatik Holding GmbH.

Where does Fortive Corporation (FTV) intend to list the notes?

Fortive intends to apply to list the notes on the New York Stock Exchange.

When is the sale of the notes expected to close?

The sale of the notes is expected to close soon.