KKR & Co. L.P. (NYSE:KKR), a global investment management firm, agreed to acquire Gardner Denver, Inc. (NYSE:GDI), an industrial equipment manufacturer for $3.9 billion. The purchase price includes the assumption of the company’s debt.

Under the terms of the agreement, the investment management firm agreed to purchase all the outstanding shares of Gardner Denver, Inc. (NYSE:GDI) for $76 per share, a 39 percent premium on the stock price of the industrial equipment manufacture on October 24, 2012.

KKR logo

According to a report from Bloomberg, several firms were interested in acquiring the company, including SPX Corporation (NYSE:SPW), Advent International Corp, TPG Capital, and ONEX Corporation (TSE:OCX), but they eventually abandoned their negotiations.

ValueAct Holdings LP, the third-largest investor of Gardner Denver, Inc. (NYSE:GDI) pushed the sale of the company in July last year, arguing that it is “the most effective way to deliver maximum value to shareholders.” In a response, the board of directors of the company confirmed that they were evaluating options to enhance shareholders’ value, including the improvement of its strategic plan, a possible merger, or a sale.

Michael M. Larsen, president and chief executive officer of Gardner Denver, Inc. (NYSE:GDI) expects that the company’s merger agreement with KKR & Co. L.P. (NYSE:KKR) would create opportunities to accelerate its existing operating initiatives and be beneficial for its employees, customers, and other stakeholders.

“In addition to the significant value to our shareholders, Gardner Denver will benefit from KKR’s track record of execution as the Company continues to pursue its strategy focused on driving organic growth, particularly in underserved markets, and building new revenue streams in the aftermarket and through the introduction of innovative customer-centric solutions across its businesses,” said Larsen in a statement.

On the other hand, Pete Stavros, head of industrial investment team of KKR & Co. L.P. (NYSE:KKR) said, “Gardner Denver is an outstanding business with a rich heritage of manufacturing excellence, innovation and quality that spans well over 100 years. The company has an impressive group of talented and dedicated employees, and we look forward to working closely with them to drive future growth and value. The long-term future of Gardner Denver is bright.”

Last month, the board of directors of Gardner Denver approved the payment of a quarterly dividend of 5 cents per share for the fourth quarter of 2012, payable on March 28. During the fourth quarter, the company’s revenue declined by 4 percent to $589.7 million. Its operating income $95.9 million, lower than its $108.1 million operating income during the same period a year earlier. Its diluted earnings per share was $1.40.

The merger agreement is subject to shareholders and regulatory approvals and other customary closing conditions.