Hubbell eyes debt for $1.1 billion buy; net debt ratio rises to 1.5x

By Devika Patel

Knoxville, Tenn., Oct. 31 – Hubbell Inc. plans to acquire Northern Star Holdings, Inc., commercially known as Systems Control, a subsidiary of Comvest Partners, for $1.1 billion in cash.

The acquisition is expected to close by the end of 2023 and will be financed through a combination of cash on hand and debt.

Net leverage is expected to rise to 1.5x, which management believes is very affordable for the balance sheet.

“We will be anticipating a source of funds for the acquisition coming from cash and debt,” executive vice president and chief financial officer William R. Sperry said on the company’s third quarter ended Sept. 30 earnings conference call on Tuesday.

“As a result of the acquisition, we’re anticipating our debt-to-EBITDA [ratio] being around 1.7x on a gross basis, a net basis about 1.5x, so interesting to see how the balance sheet has grown and the cash flow has grown to allow a $1 billion deal to be very affordable by leverage means,” he said.

Cash and cash equivalents were $572.8 million as of Sept. 30, 2023, compared to $440.5 million as of Dec. 31, 2022.

Long-term debt was $1,439,700,000 as of Sept. 30, 2023, compared to $1,437,900,000 as of Dec. 31, 2022.

Short-term debt was $3.3 million as of Sept. 30, 2023, compared to $4.7 million as of Dec. 31, 2022.

The electrical products and utility solutions company is based in Shelton, Conn.

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