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CECO Environmental Corp. (NASDAQ:CECE)

Acquisition of Met-Pro Corporation Conference

April 22, 2013 10:00 am ET

Executives

Jeffrey Lang - Chief Executive Officer, President and Director

Raymond J. De Hont - Chief Executive Officer, President and Director

Analysts

Ajay Kejriwal - FBR Capital Markets & Co., Research Division

Robert W. Stone - Cowen and Company, LLC, Research Division

Graham Meharg

Steve Shaw - Sidoti & Company, LLC

Gerard J. Sweeney - Boenning and Scattergood, Inc., Research Division

Dan Monk

Operator

Good day, ladies and gentlemen, and welcome to the CECO Environmental to Acquire Met-Pro Corporation Conference Call. My name is Alex, and I'll be your operator today [Operator Instructions] As a reminder, this call is being recorded for replay purposes. And now, I'd like to hand over to Jeff Lang, CEO of Environmental; and Ray De Hont, CEO of Met-Pro Corporation. Go ahead, please.

Jeffrey Lang

Good morning, everyone. Thank you for joining us to discuss this morning's announcement regarding CECO, CECO entering into a definitive agreement to acquire Met-Pro Corporation. I'm pleased that Ray De Hont, the CEO and President of Met-Pro, will join me on the call today as we kick off our exciting business transaction.

Before we begin, we would like to caution investors regarding the forward-looking statements. Any statements made in today's presentation that are not based on historical fact are forward-looking statements. Such statements are based on certain estimates and expectations and are subject to a number of risks and uncertainties. Actual and future results may vary materially from those expressed or implied by the forward-looking statements. We encourage you to read the risks described in our SEC filings. Except to the extent required by applicable security laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that you may hear today.

Now it is with great enthusiasm that I'll discuss the announced definitive agreement to acquire Met-Pro Corporation. This acquisition marks an exciting and transformational step forward in our company's history and stands to greatly enhance our position in the marketplace. Met-Pro is a leading global niche-oriented provider of product recovery, air pollution control technology, fluid handling and filtration solutions, with broad exposure across multiple diverse end markets. Additionally, Met-Pro, by virtue of its exceptional product portfolio and geographical footprint, is ideally positioned to meet the world's growing need for clean air and water, reduced energy consumption and improved operating efficiencies.

Since I began at CECO in 2010, I've watched our team here at CECO transform the business and position CECO for a better future. When I joined CECO, the business was -- model was highly subject to market volatility and its end markets' cyclical trends. Margins were lower and there were significant room for improved continuity with respect to the platform and our family of companies as we strove towards achieving operational excellence.

Over the past several years, CECO has embarked upon an aggressive plan to reduce cyclicality, particularly with respect to end markets, which experienced significant volatility, streamlining the business and improving margin performance. To that point, we have been extremely successful in increasing margins, gross margins and operating margins, as well as EPS. We improved gross margins from 23% in 2010 to 31%, 2012, and operating margins from 3.6% to 12.4% and EPS from $0.15 to $0.65 over the same period.

Additionally, we have been very focused on building our base of recurring revenues as well as expanding our global reach, in particular, China. Given what we have accomplished today, we are now focused on, than ever, growing the top line organically as well as through acquisitions. To that point, and as many of you know, the acquisition of Met-Pro constitute -- constitutes our third strategic acquisition in the last 4 months. We recently completed 2 excellent tuck-in acquisitions with Adwest Technologies and Aarding Thermal Acoustics.

In December 2012, we acquired Adwest Technologies, a leading manufacturer of regenerative thermal oxidizers and volatile organic compound abatement systems.

In March, we successfully completed the acquisition of Aarding, a global manufacturer, supplier and technology leader of natural gas turbine, exhaust systems and silencer applications.

While these applications and acquisitions have contributed tremendous strategic value, we believe that the acquisition of Met-Pro will be truly transformative. Moreover, it stands to reaffirm our commitment to growth, to our strategic objective of further consolidating the air pollution control technology sector and to maximize value for all our shareholders.

Pursuant to the terms of the definitive agreement, CECO will acquire each issued and outstanding share of Met-Pro common stock for $13.75 per share, which represents a 43% premium to Met-Pro's share price, 1 day prior to announcement. The consideration includes $7.25 per share in cash, $6.50 per share in CECO common stock.

With regards to the stock component of the consideration, the number of CECO shares to be issued to Met-Pro shareholders is calculated using a fixed price floating exchange ratio subject to a collar, based upon the volume weighted average trading price of CECO common stock for the 15-day period ending on the date immediately preceding the signing of the agreement. Similarly, the 15-day VWAP will be utilized prior to closing to calculate the final share issuance amounts. Additionally, I would like to add that the transaction is being supported by a highly favorable flexible financing from Bank of America that will provide us with the significant liquidity as well as comfort in facilitating our ability to grow while maintaining a low leverage profile.

I'll note that the Board of Directors of each CECO and Met-Pro has unanimously approved the transaction and that the completion of the transaction will be subject to approval of the stockholders of both CECO and Met-Pro.

Having touched briefly on the terms of the acquisition, let me now take a moment to address why we consider -- what we consider to be among the key merits of the combination. First, the combined entity is expected to create a clear market leader of scale within the air pollution control and product recovery technology sector. We call it the premier platform in our space. The space continues to be highly fragmented and ripe with acquisition opportunities to support future acquisition growth. Our combined platform will be ideally positioned to execute on future industry consolidation due to our enhanced size, balance sheet strength, flexibility and improved cash flow generation profile. Secondly, the acquisition of Met-Pro will dramatically expand our customer breadth and depth. Currently, Met-Pro serves over 8,000 customers, including multiple Fortune 1000 companies, with no single customer constituting more than 10% of sales and with the top 10 customers contributing less than 25% of sales.

Combined, CECO will have access to over 11,000 active customers globally and a significantly enhanced platform with which to drive cross-selling revenue generation initiatives. Our highly technical sales force will be able to quickly bring to bear CECO's full product, strength and services to the entirety of our expanded customer base. Further, the combination will be extremely positive from a product and end-market standpoint.

The acquisition of Met-Pro improves CECO's strength in complementary areas, such as filtration of VOC emissions, fumes and industrial odors, ventilation systems, dust collection, catalytic reduction, process and pollution control equipment and parts, while expanding our depth into new competencies core to Met-Pro, including purification of water in harsh, corrosive liquid applications, fluid handling and proprietary chemicals for the treatment of municipal and industrial water systems.

To this end, Met-Pro will increase our end-market exposure into areas such as food processing, pharmaceuticals, government and municipalities. In turn, this will diversify our end-market exposure and act as a natural head against traditional cyclicality found in chemical, utility, petrochemical and large industrial manufacturing end markets.

In addition to improving our product depth and customer and end-market diversification, the acquisition will help expand our already sizable install base as well as our geographic footprint, particularly with respect to emerging markets such as China.

With respect to our pro forma geographic footprint, Met-Pro will add 7 core manufacturing facilities to our global footprint of 5 core manufacturing sites, including 5 in North America, 1 in Europe, 1 in China. The 2 global facilities will be critical to our ability to access not only the European markets but as well as further penetrating our commitment to China, India and other fast-growing Asian markets.

China stands as a tremendous opportunity for air pollution control technology and we're excited with the Met-Pro acquisitions to go after that business further.

The acquisition of Met-Pro will bring us closer than ever to our customers, with enhanced ability to provide them with market-leading products and service solutions.

Finally, the acquisition of Met-Pro is an exceptional opportunity to bring together and leverage the strengths of 2 world-class, industry-leading management teams, Ray De Hont and his team and employees will contribute tremendous industry expertise and trade knowledge that stands to benefit the entire combined platform.

We are thrilled that Ray, and Neal Murphy, will be onboard. Ray as COO, and Neal Murphy as Chief Financial Officer, respectively. With that, would you like to make a few comments, Ray?

Raymond J. De Hont

Yes, Jeff. Thank you, Jeff, and good morning, everyone. I strongly echo Jeff's enthusiasm regarding the definitive agreement for CECO to acquire Met-Pro Corporation. This is truly a combination in which the whole will be much greater than the sum of the parts. I am confident that this combination will lead to increased growth and profitability well beyond what could have been achieved by either company on a stand-alone basis. The market synergies, the expanded global footprint, the diversification of product platform and the cost-effective efficiencies associated with combining 2 smaller public companies are just a few of compelling drivers behind this combination. Further, the strong financial position of the combined company will enable continued expansion and market leadership in our chosen markets.

Under Jeff's exceptional leadership over the past few years, the CECO team has accomplished a great deal in transforming their business to generate very impressive growth, profitability and shareholder value creation. And Neal Murphy and I are very excited to join the CECO leadership team. Jeff?

Jeffrey Lang

Thank you, Ray. To further highlight the key strategic takeaways, let me summarize by saying that the combined business will result in the industry's leading global one-stop shop with the capability to provide end-to-end air pollution control solutions in an environment where customers are increasingly demanding more solutions from fewer vendors and fewer providers. This extends from our ability to design fully integrated and custom first-fit solutions to our sustained aftermarket support through market-leading parts and components. As such, we'll be uniquely positioned to capitalize on fast-growing end markets and secular trend supported by increasingly stringent levels of air pollution control regulation globally.

Increasing global energy demand, emerging market dynamics, and most notably, in China and India, and a low-cost natural gas environment, which is driving new plant construction in the U.S. and globally.

In addition to the overwhelming strategic merit of this acquisition, CECO stands to benefit tremendously from a financial perspective as well. We believe the pro forma company will realize significant synergies, enhance top line performance, improve gross and EBITDA margins and significant EPS accretion.

We expect to realize approximately $9 million in cost synergies by the end of 2014 as well as benefits from significant cross-selling revenue generation and geographic opportunities which can result in additional upside.

Furthermore, one of the additional benefits of this transaction is Met-Pro brings a significant amount of unencumbered real estate. We believe such real estate can be monetized through potential sale leasebacks, providing a source of additional liquidity and bring Met-Pro in alignment with our asset-light strategy. We believe such incremental liquidity can be used to fund organic growth initiatives including acquisitions or repayment of debt.

So in closing, we are very excited about the acquisition of Met-Pro and for the extremely positive outlook our combined businesses possess going forward. We hope that this overview has helped to reinforce our companies' vision, strength and robust growth prospect as our team continues to execute on our stated initiatives and acquisition integration objectives. To supplement this overview, we'll be filing a short investor presentation on the transaction that highlights the key strategic rationale and benefits of the deal for the combined shareholder base.

We thank you, and we'd now like to open up for any questions you may have.

Question-and-Answer Session

Operator

[Operator Instructions] First question comes from the line of Ajay Kejriwal from FBR Capital Markets.

Ajay Kejriwal - FBR Capital Markets & Co., Research Division

Congratulations, a very nice complementary deal. And Ray and Neal, welcome to CECO.

Raymond J. De Hont

Thank you.

Ajay Kejriwal - FBR Capital Markets & Co., Research Division

So maybe if I can start with -- you talked about synergies, $9 million in cost sale -- some color on how much of that's just public company cost being taken out versus others? And then maybe talk a little bit about the potential for revenue synergies, what would be the big broad areas there?

Jeffrey Lang

Yes. Thanks, Ajay. Synergies, that's a broad subject and we've been working on that for a while. There is public company expenses, there's plant optimizations, there are things that we could manufacture that currently Met-Pro subcontracts. There's a host of things with the headquarters and such. Regarding the revenue side, we think, first and foremost, putting the 2 large air pollution control businesses together provides the best engineered toolbox for our sales force to take the market. So we think our sales teams, by having the broadest expansion of solutions, will generate revenues. The other -- the second piece is in China. We have a very large, a very significant footprint in China. We now can introduce many of the outstanding Met-Pro products into China. We can sell them through our sales engineering organizations. We can fabricate them in China as well as consolidate our 2 businesses. At the same time, our global footprint provides some significant sales and fabrication opportunities. And more importantly, this puts us in building the premier platform in the air pollution control technology and product recovery space as well as some of the other strong divisions we have. So this will position us for significant growth, domestically and globally, and we'll be the best-in-class provider in our space, Ajay.

Ajay Kejriwal - FBR Capital Markets & Co., Research Division

Excellent. So that $9 million, is the bulk of that public company cost or do you have some manufacturing rationalization also in there?

Jeffrey Lang

Yes, I mean there is headquarter's cost, there is manufacturing synergies, there is plan optimizations. There's a host of things that go into that $9 million, Ajay, as well as the typical public company stuff.

Raymond J. De Hont

Ajay, I'd like to add a little bit to what Jeff had said as far as the global footprint and so forth. During our conference calls, Met-Pro's conference calls, I've stated many times that one of the key things for growth in our products was the global footprint, to have people on the ground, in the areas where we have opportunities to penetrate the markets that we're strong in domestically. This gives us that opportunity. Not just for the product recovery/pollution control side, but the liquid side of our business. The pump side, the filtration side. There's some very good synergies there from the revenue side that are provided from this merger. And we look forward to that end of the business also growing as a result of this merger.

Jeffrey Lang

Yes, Ajay, we can talk further on that offline, but there is duplicative public company expenses, there is non-core real estate, there is plant optimizations. And then there's also the concept that we think we can run 1 larger company more efficient than 2 smaller companies. There is the plant optimization. We do quite a bit of external subcontracting, and we think blending Met-Pro's plants with CECO's plants is going to have a favorable output from a synergy perspective.

Ajay Kejriwal - FBR Capital Markets & Co., Research Division

Excellent, those are all good points. And then, Jeff, you mentioned real estate and things you could do with that.

Jeffrey Lang

Yes.

Ajay Kejriwal - FBR Capital Markets & Co., Research Division

Maybe any rough sense on the size of the liquidity that could be generated at some point?

Jeffrey Lang

Well, we've hired a real estate consultant to take a look at that. And we believe we could be north of $20 million if we were to monetize that, sell it and have a leaseback arrangement with those current facilities. And that's something we're looking at doing in the first 12 months of the transaction.

Ajay Kejriwal - FBR Capital Markets & Co., Research Division

Good. And then maybe one last one from me on the transaction. So there is a collar, any color on that in terms of what's the range on that collar?

Jeffrey Lang

Yes, Ajay, what we're -- we're going to -- we're filing the merger agreement today. You'll see that. You'll see the related documents, the transaction agreement. And all that information will be put on the -- will be filed today. There'll be an investor presentation that will be attached to that. So I think you'll have everything you need by tomorrow.

Operator

Our next question comes from the line of Rob Stone from Cowen and Company.

Robert W. Stone - Cowen and Company, LLC, Research Division

First, a quick one, Jeff, what do you expect is going to be the cost of the debt that you're using to fund the cash portion?

Jeffrey Lang

The fundings coming from Bank of America, our base rate is LIBOR plus 175 basis points to 200 basis points. It's a very attractive rate, it's a very flexible financing package. And quite honestly, we hit perfect timing with the rate, very favorable.

Robert W. Stone - Cowen and Company, LLC, Research Division

Okay. And I wonder if you could comment a little bit on Met-Pro's competitive position, market share ranking in its relevant markets, and how you think competitors may react, if at all, to this combination.

Jeffrey Lang

Well, first off, Met-Pro has premier products and technology and the niches that they play in they're in the top 1, 2 or 3 place. So they're in a good place. They're good margins. Their brands go back decades with premier reputation, the Flex-All [ph], the Flex-Kleen, the Duall [ph], the Strobic Air, the Global Pump Solutions, the Fybroc, just premier brands, and they're in good positions where they play.

Raymond J. De Hont

Rob, I'd like to answer that also. As far as -- there's very little overlap between the CECO markets and the Met-Pro markets. However there's a lot of compatibility with the products. So it's an opportunity to be able to take our products and push them through the CECO sales organization and vice versa. We don't come up against them as a competitor that often, so there's a lot of upside from that.

Jeffrey Lang

Yes. That's one of the premier attractiveness of this combination, Rob, is our sales engineers can now provide almost 2x the portfolio in front of their customer with premier brands with 0 cannibalization, so it's an outstanding combination.

Robert W. Stone - Cowen and Company, LLC, Research Division

Okay. So looking at the Met-Pro business inside, sort of the framework that you've been using to discuss CECO, you have engineered equipment and then you have parts and service, sort of the recurring portion that you've had a strategic focus on building. Can you say, Ray, how Met-Pro's business splits along those line? How much is new equipment versus recurring revenue in parts and service?

Raymond J. De Hont

Recurring revenue is probably around 35%, I believe it is. And that includes our parts- and consumables-type businesses, so it's roughly 65-35. And the thing that really is attractive here is that CECO has a very strong service-type business whereas we are in the infancy stage of that. So that service business, along with our parts and aftermarket, there's a lot of compatibility there that can drive that reoccurring type business.

Robert W. Stone - Cowen and Company, LLC, Research Division

Okay. And finally, Jeff, do you have a sense of how the combination may change your effective tax rate?

Jeffrey Lang

We haven't studied that too much. However, it should be consistent. We've got a bigger element in China. Now with adding Met-Pro's portfolio into China, driving more revenues in Asia, which has a significantly lower tax rate, that should lend itself some favorableness towards the tax -- the effective tax rate. We both have businesses in the Netherlands, we plan to grow those. So I'm not anticipating significant changes, but as we grow the China side of the business, the tax rate should come down. And we're also applying for R&D technology tax rates in China that's being evaluated now that would move us to a lower effective tax rate. So our ambition is to bring it down.

Robert W. Stone - Cowen and Company, LLC, Research Division

Okay. I apologize I said final, but my -- the last question that occurs to me is, are there any regulatory hurdles or other things besides the necessary shareholder approvals?

Jeffrey Lang

Rob, normal. Normal process stuff for regulatory. I think this is a huge win for our shareholders. We're going through normal closing regulatory processes. SEC review and comments and, of course, the proxy shareholder votes, so all very typical.

Operator

Our next question comes from the line of Graham Meharg from Loeb Capital.

Graham Meharg

I just have a -- I didn't see anything in the press release on timing. Any thoughts there sort of third quarter, fourth quarter type of timing?

Jeffrey Lang

Yes, we've been studying that quite a bit. And as you know, this is going through the normal regulatory processes and the waiting period and the proxy voting. We're anticipating the transaction to close in Q3.

Graham Meharg

Q3, okay. And then just sort of on the background, I guess, of -- I mean, was this sort of, I don't know, the materialization of any sort of process or was this sort of came together, just you guys talking about it exclusively? Sort of how did that come about?

Jeffrey Lang

How did the merger come about?

Graham Meharg

Right.

Jeffrey Lang

Well, actually, we were the strong players in the space, and Ray and I have been talking for a couple of years now. And actually, Phil DeZwirek, who strategically put a lot of the technology businesses together at CECO, had this as a priority on his strategic list. So we've been focused on this for quite some time.

Raymond J. De Hont

Jeff and I probably know each other's businesses better than we know our own, [indiscernible] looking at each other.

Operator

Our next question comes from the line of Ed Schwartz [ph].

Jeffrey Lang

Ed? Alex, let's go to the next question, please.

Operator

Our next question comes from the line of Gerry Sweeney.

Raymond J. De Hont

Gerry?

Jeffrey Lang

Gerry?

Operator

It appears Jerry's line has dropped off as well. I can now bring back Ed Schwartz.

Unknown Analyst

How will this affect your dividend at CECO? Your shareholder -- the dividend to shareholders?

Jeffrey Lang

We plan to continue paying a dividend. And the actual rate of that will be evaluated in the future.

Operator

Our next question comes from the line of Steve Shaw from Sidoti & Company.

Steve Shaw - Sidoti & Company, LLC

Minus the public company costs and maybe the real estate costs and things like that, how quickly can we expect to see some of those operating synergies?

Jeffrey Lang

Well, that would depend on when we close. When we were studying this several months ago, we were thinking, if we were to able to close in mid-2013, potentially 1/3 of the synergies could be picked up in 2013 and 2/3 in 2014. But I think the simple answer is we hope we can pick up the fullest of synergies by the end of 2014.

Operator

Our next question comes from the line of Gerry Sweeney.

Gerard J. Sweeney - Boenning and Scattergood, Inc., Research Division

I want to talk a little bit more about on the revenue generation side. Looking at it, I mean, there's obviously a 1 plus 1 equals 2. But just looking at CECO's -- the revenue line the last couple of quarters, we'll say last 6-or-so quarters, revenue has been somewhat stagnant. And Ray, I know on the Product Recovery/Pollution Control side, that's been a little bit of a challenge on the profitable -- consistency on the profitability side. I mean, what -- can you give a little bit more detail, as you put these 2 companies together, what could accelerate growth? I mean, you did talk about merging the 2 platforms, China, different products, but is there something more out there that we could look forward that's really going to maybe kick it up to the next step?

Jeffrey Lang

Well, I think the demand for air pollution control technology is increasing domestically and in Asia. We've also -- we also have a pretty solid footprint in India. There's things that we can do combined that we couldn't do separately. Ray has some outstanding engineered equipment, I'll just say Strobic Air technology that's designed to remove fumes and odors and emissions from facilities, we also -- we, now, joining forces, have the ability to install those systems for Ray. And that's just one product line, we could take that to 3 or 4 product lines of Ray. So there's a sales revenue synergy we can talk about. I think putting our sales engineers in front of customers with a host of engineered products now, additional engineered products will drive revenues for us. Again, I think introducing 3 or 4 more products into our China framework will drive revenues. And at the same time, we -- you mentioned we've had some flatness in some of our revenues. We've also been doing -- have done some pruning as well, so to drive the operating margin. But I think the revenue piece is going to be quite exciting. Over the last 3 years, we said we want to grow 15% a year, top line. A portion of that organically and a portion of that inorganically through acquisitions, and let's -- so we're pretty confident about the organic side. Also, we happened to be in a very fragmented universe, so there is hundreds and hundreds of opportunities to do bolt-on acquisitions that would fit our core competencies.

Raymond J. De Hont

Gerry, I think the other thing is, as far as, we've made a lot of significant progress at Met-Pro as far as getting in to the engineering houses, the large engineering houses. And with this toolbox now that we have of additional items, the CECO and the Met-Pro, it gives you more opportunity with these large engineering companies. The other thing is we -- the core is the air pollution control product recovery portion of the business. But Jeff and I were just talking this morning, I asked him the question. I said, "You're pretty big in the asphalt market, aren't you?" And he says, "Absolutely." Well, when you look at the asphalt market, our hot oil pumps are used in that market. So now you've got a market where you -- you're on the air side as well as the fluid handling side and where you can take the relationships and build off of those to grow that -- grow a particular market. And there's a lot of other markets with similar type traits, so those are things that really excite us.

Jeffrey Lang

Yes. Excellent point, Ray. And the last comment I'd make is we just acquired Aarding, which is a global leader in the natural gas technology of downstream systems. We had 1-month performance with Aarding in March, it's been excellent. So going forward, we're going to see -- we're going to have a lot of revenue pickup from the Aarding and the Effox group globally into the natural gas sector. So we've got a few things that are going to help us drive organic growth.

Gerard J. Sweeney - Boenning and Scattergood, Inc., Research Division

Okay. And then, Ray, you mentioned the pump side. I mean, what's the view of that? I mean, obviously, in the Met-Pro portfolio, I mean, that's sort of the crown jewel. I mean, excellent operating margins, very good on the consistency side niche. But, obviously, that will become a much smaller piece of a larger pie. But is this a view of maybe a second platform or -- I want to see what the thoughts were on the combined basis?

Jeffrey Lang

Not at all. We -- not at all. We see the air pollution control and the product recovery as one of our large core businesses, but the pump group is something we're very excited about. We're going to grow it. We're going to grow it organically. We're going to do some potentially bolt-on acquisitions. It's a premier business. We have stellar management leading that group. And we're going to keep investing in that, so it grows and becomes a much larger part of the new organization.

Gerard J. Sweeney - Boenning and Scattergood, Inc., Research Division

Okay, I apologize. I didn't mean secondary. I meant like a second platform, as maybe a second area of growth.

Jeffrey Lang

Sure. No, I understand, Gerry.

Raymond J. De Hont

Let's not forget, Jeff has a vast amount of experience in the pump industry, having worked with Ingersoll Rand. So it's not something that's unknown to Jeff. And I think putting our minds together, along with the management team that we have with Fluid Handling, it could be very exciting. And we can use the global locations to really drive and penetrate that business. So we're not dealing with a team that doesn't have knowledge of that market from both sides.

Jeffrey Lang

Yes. That's good -- that's correct, Ray. The Fluid Handling business is going to be part of our core. It provides cross-selling synergies, customer synergies. The margins are terrific and we think we can do some -- we can grow it organically. And we're going to do some bolt-ons to keep fueling that business for the new company.

Gerard J. Sweeney - Boenning and Scattergood, Inc., Research Division

Got it. Okay. And then valuation standpoint, any way you can give us maybe a little walk through how you got to $13.75 or $210 million? Obviously, there's probably $3.50 to $4 worth in cash and real estate on a combined basis, but maybe a little thoughts on how you got to your number?

Jeffrey Lang

You'll see some of that in the documents we filed to give you a little more color around that. But we found that to be a very attractive price for the new company. And at the same time, it was probably in the 11 multiple range, but we're doing this transaction to be the premier -- to be the premier company in our sector. We view it as a growth engine. We view it as what we can do globally and domestically. We believe we can run the company more efficiently combined versus separately, so we have a very positive outlook on it. And everything we've done from an accretion perspective, all the formulas, all the things we've done with Jefferies, all the things we've done with our board, every way you look at it, with and without synergies, it's extremely accretive to our shareholders from an operating margin and earnings perspective.

Operator

Our next question comes from the line of Albert Mayer from MM Cap [ph].

Unknown Analyst

I'm just wondering, so will Met-Pro shareholders be receiving the second quarter dividend?

Jeffrey Lang

Yes.

Unknown Analyst

Okay, that's one. The other thing is can you just -- can you explain this collar and the range of the collar? I know you said you're going to be filing it later, but it would be great to know what the terms are now. I mean, we are in a public forum.

Jeffrey Lang

Yes. Albert, what we'd like to do is we -- we've put a lot of work on the collar, it's part of the related documents that CECO and Jefferies have worked rigorously on. And we're going to -- we're filing that today. We'd like you to -- we'd like to direct the research analysts to those documents, so you have the clarity and everyone has it at the same time. So that's our message on the merger agreement and the collar.

Unknown Analyst

What will the range be on CECO stock price? Can you just provide the range?

Jeffrey Lang

Yes, 15% each way.

Unknown Analyst

From yesterday's close or from Friday's close?

Jeffrey Lang

15-day average.

Unknown Analyst

Okay. So -- sorry -- 15% each way from the 11, 12 [ph] price?

Jeffrey Lang

You need to refer to the related documents. We don't want to get into that today.

Unknown Analyst

Got it. Okay. And that'll be for the 15-day view at -- prior to close?

Jeffrey Lang

That's right.

Unknown Analyst

Now you're expecting to close in Q3?

Jeffrey Lang

Right.

Operator

Our next question comes from the line of Steve Bogart [ph] from High Cap [ph].

Jeffrey Lang

Steve?

Operator

We have no response from Steve's line. I'll now move on to Dan Monk from WCPO.

Dan Monk

I'm wondering if you can tell me what will be the job impact in Cincinnati for this transaction?

Jeffrey Lang

What do you mean?

Dan Monk

Well, how many employees do you have here as the headquarter's going to grow. As you consolidate headquarters, will it occur to Cincinnati's benefit?

Unknown Executive

Got you.

Jeffrey Lang

Yes, good question. We have about 20 employees here in Cincinnati and we also have several options of where we can have our headquarters, Cincinnati or Harleysville. And actually, Ray and I haven't finished evaluating that. We have several options for where the headquarters will be or, potentially, administrative offices, so we're still working on that. We probably have several months before the close, so we'll have it -- we'll have all of that buttoned up before the closing of the transaction.

Dan Monk

Okay. How big will the combined enterprise be once you consolidate headquarters?

Jeffrey Lang

In terms of what?

Dan Monk

Employees and -- well, really, impact?

Jeffrey Lang

We haven't sorted out all those details. We know the combined pro forma of the 3 entities, CECO, our acquisitions in Met-Pro are in the $286 million revenue and $40 million EBITDA from pro forma 2012. But in terms of the actual head count, we haven't defined that as of yet.

Dan Monk

And this is the third acquisition this year, were the 2 queuing up this one or -- what is the grand strategy? Are there more to come?

Jeffrey Lang

Well, right now, we're in really good shape. We plan to close on the Met-Pro transaction here in Q3. We're very excited about the Aarding and Adwest technology acquisitions. And our plan is to make sure we have a good growth trajectory for them globally and domestically and to move to close on the Aarding -- the Met-Pro transaction. So that's the near-term.

I think, Alex, was going to -- we'll take one more caller, please, and then we'll wind down.

Operator

The next question comes from Johnny Reiner [ph] from Imperial Capital.

Unknown Analyst

All my questions have been answered, appreciate it.

Jeffrey Lang

Thank you, all, very much for joining the announcement today in the CECO call -- CECO and Met-Pro call. We look forward to working with you in the future.

Operator

Thank you for your participation today. This concludes your presentation. You may now disconnect. Good day.

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Source: CECO Environmental's CEO Hosts Acquisition of Met-Pro Corporation Conference (Transcript)

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