CIR CIRCOR International Inc

Treatment of Restricted Stock Units and Performance Share Units

        Upon the Effective Time, each then-outstanding RSU granted prior to 2019 will become vested and may be cancelled in exchange for a payment equal to the Offer price and each then-outstanding PSU granted prior to 2019 will vest and may be cancelled in exchange for a payment equal to the Offer price, assuming that the performance vesting conditions associated with such PSU were satisfied at target (or at a greater level based on actual achievement as of the Effective Time), in each case, subject to applicable withholding.

        The following table summarizes the aggregate cash consideration that would be payable, based on the Offer price of $45.00 per Share, in respect of RSUs and PSUs (assuming that the performance

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vesting conditions associated with such PSU were satisfied at target) held by the Company’s executive officers and directors as of June 18, 2019:

Potential Cash Severance and Change of Control Benefits

        The Company has entered into agreements with each of its executive officers (other than Ms. Dawkins, who is a participant in the Company’s Change in Control Severance Plan) providing for the cash termination benefits described below if the executive officer’s employment is terminated by the executive officer for good reason or by the Company other than for cause. For a quantification of estimated cash severance payments that could become payable to our named executive officers, see “ Item 8—Additional Information—Golden Parachute Compensation ,” and for our other executive officers, using the same assumptions in such table, see below.

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Scott Buckhout is entitled to a lump sum equal to his current base salary plus target bonus in effect during the fiscal year in which the termination occurs and the Company shall pay contributions for COBRA coverage at the same rate of employer contributions prior to termination of employment for up to twelve (12) months, in the event his employment is terminated by the Company other than for cause, death or disability, or if Mr. Buckhout resigns his employment for good reason, in each case subject to Mr. Buckhout’s execution of a release of claims. In the event that, within twelve (12) months following a change of control, Mr. Buckhout’s employment is terminated by the Company other than for cause or Mr. Buckhout resigns his employment for good reason, then, instead of the foregoing benefits, Mr. Buckhout will be eligible to receive a lump sum payment equal to two (2) times his base salary at the time of termination plus his target annual incentive compensation under the Company’s Executive Bonus Compensation Plan and the Company shall pay for the cost of COBRA premiums for up to two (2) years.



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Each of Chadi Chahine, Sumit Mehrotra, Lane Walker and Arjun Sharma is entitled to a lump sum payment equal to his base salary in effect during the fiscal year in which the termination occurs and a prorated bonus based on actual performance in the year of termination, and the Company shall pay contributions for COBRA coverage at the same rate of employer contributions prior to termination of employment for up to twelve (12) months, in the event the executive’s employment is terminated by the Company other than for cause, death or disability,

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or if the executive resigns his employment for good reason, in each case subject to the executive’s execution of a release of claims.

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In the event that, within twelve (12) months following a change of control, Mr. Mehrotra’s employment is terminated by the Company other than for cause or Mr. Mehrotra resigns his employment for good reason, then, instead of the foregoing benefits, Mr. Mehrotra will be eligible to receive a lump sum payment equal to two (2) times his base salary at the time of termination plus his target annual incentive compensation under the Company’s Executive Bonus Compensation Plan and the Company shall pay for the cost of COBRA premiums for up to two (2) years.



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In the event that, within twelve (12) months following a change of control, Mr. Chahine’s or Mr. Walker’s employment is terminated by the Company other than for cause or either executive resigns his employment for good reason, then, instead of the foregoing benefits, each such executive will be eligible to receive a lump sum payment equal to two (2) times his base salary plus his target annual incentive compensation under the Company’s Executive Bonus Compensation Plan and the Company shall pay for the cost of COBRA premiums for up to two (2) years.



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In the event that, within twelve (12) months following a change of control, Mr. Sharma’s employment is terminated by the Company other than for cause or Mr. Sharma resigns his employment for good reason, then, instead of the foregoing benefits, Mr. Sharma will be eligible to receive a lump sum payment equal to two (2) times his base salary at the time of termination plus his highest actual annual incentive compensation under the Company’s Executive Bonus Compensation Plan in the three (3) immediately preceding fiscal years and the Company shall pay for the cost of COBRA premiums for up to two (2) years.



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Each of David Mullen and Andrew Farnsworth are entitled to receive a lump sum payment equal to two (2) times his base salary at the time of termination plus his target annual incentive compensation under the Company’s Executive Bonus Compensation Plan and the Company shall pay for the cost of COBRA premiums for up to two (2) years in the event that, within twelve (12) months following a change of control, his employment is terminated by the Company other than for cause or he resigns his employment for good reason. Using the assumptions set forth in “ Item 8—Additional Information—Golden Parachute Compensation ,” we estimate that the aggregate value of cash severance that could become payable to Mr. Mullen is $857,205 and Mr. Farnsworth is $932,131.



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Tony Najjar is entitled to receive a lump sum payment equal to two (2) times his base salary plus his target annual incentive compensation under the Company’s Executive Bonus Compensation Plan and the Company shall pay for the cost of COBRA premiums for up to two (2) years. Using the assumptions set forth in “ Item 8—Additional Information—Golden Parachute Compensation ,” we estimate that the aggregate value of cash severance that could become payable to Mr. Najjar is $1,005,985.

        Tanya Dawkins is a participant in the Company’s Change in Control Severance Plan, which provides that in the event that, within twelve (12) months following a change of control, Ms. Dawkins’s employment is terminated by the Company other than for cause or Ms. Dawkins resigns her employment for good reason, she is entitled to receive a lump sum payment equal to her current base salary plus her current annual incentive target award. In addition, she is entitled to receive a prorated bonus for the year of termination based on actual performance and the Company shall pay a cash payment equal to the COBRA premium for the highest level of coverage available under the Company’s health plans prior to termination of employment (reduced by the monthly amount she would have paid for such coverage if she had remained employed) for up to twelve (12) months (such amounts only to be payable if Ms. Dawkins participates in the Company’s health plans as of the date of

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termination of employment), in each case subject to her execution of a release of claims. Ms. Dawkins is not currently a participant in the Company’s health plans so she is not expected to receive any cash payments with respect to COBRA premiums. Using the assumptions set forth in “ Item 8—Additional Information—Golden Parachute Compensation ” and assuming Ms. Dawkins’s prorated bonus for the year of termination is earned at target, we estimate that the aggregate value of cash severance that could become payable to Ms. Dawkins is $254,340.

        The treatment of Options, RSUs and PSUs for the executive officers is addressed above under “ Item 3—Past Contacts, Transactions, Negotiations and Agreements—Consideration Payable Pursuant to the Offer and the Proposed Merger—Treatment of Stock Options and Treatment of Restricted Stock Units and Performance Share Units ” above. See also “ Item 8—Additional Information—Golden Parachute Compensation .”

Directors’ Compensation

        For a description of the compensation earned by the Company’s directors, reference is made to the “Director Compensation” section of the 2019 Proxy Statement, which is filed as Exhibit (e)(1) to this Statement, incorporated by reference herein and qualified the foregoing in its entirety.

Indemnification and Limitation of Liability of Directors and Officers

        The Company’s amended and restated bylaws (the “bylaws”) provide that the Company will indemnify and hold harmless each director and officer to the fullest extent authorized by the DGCL against any and all expenses, judgments, penalties, fines and amounts reasonably paid in settlement that are incurred by such director or officer or on such director’s or officer’s behalf in connection with any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, inquiry, investigation, administrative hearing or other proceeding, whether civil, criminal, administrative, arbitrative or investigative or any claim, issue or matter therein, which such director or officer is, or is threatened to be made, a party to or participant in by reason of such director’s or officer’s corporate status, if such director or officer acted in good faith and in a manner such director or officer reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The rights of indemnification provided by the bylaws will continue as to any director or officer after he or she has ceased to be a director or officer and shall inure to the benefit of his or her heirs, executors, administrators and personal representatives. The Company will indemnify a director or officer seeking indemnification in connection with a proceeding initiated by such director or officer only if such proceeding was authorized by the Board, unless such proceeding was brought to enforce a director’s or officer’s rights to indemnification under the bylaws. The bylaws require the advancement of expenses incurred by directors in relation to any action, suit or proceeding and permit such advancement of expenses incurred by officers provided the advancement of expenses is accompanied by an undertaking by the applicable director or officer to repay any expenses so advanced if it is ultimately determined that such director or officer is not entitled to be indemnified against such expenses. The bylaws also provide that if the DGCL is amended to expand the indemnification permitted to directors and officers, then the Company will indemnify such persons to the fullest extent permitted by the DGCL as amended.

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        In addition to the indemnification provided in the bylaws, the Company has entered into indemnification agreements with each of its directors and executive officers reflecting the foregoing. Under these agreements, the Company’s directors and officers are indemnified for certain expenses and liabilities incurred in connection with any threatened, pending or completed claim, action, suit, arbitration, alternate dispute resolution process, investigation, administrative hearing, appeal, or any other proceeding, whether civil, criminal, administrative, arbitrative or investigative, whether formal or informal, including a proceeding initiated by a director or officer to enforce such director’s or officer’s rights under the indemnification agreement, by reason of the fact that they are or were a director, officer, partner, trustee, employee or agent of the Company or any of its subsidiaries whether or not he or she is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under the indemnification agreements. In the case of an action or proceeding by or in the right of the Company or any of its subsidiaries, no indemnification will be provided under the indemnification agreements where a court of competent jurisdiction has finally determined that the director or officer (i) failed to act in good faith and in a manner such director or officer believed to be in or not opposed to the best interests of the Company or (ii) is liable to the Company unless and to the extent that a court of competent jurisdiction shall determine that such indemnification may be made. The Company also maintains officers’ and directors’ liability insurance, which insures against liabilities that the Company’s officers and directors, in such capacities, may incur.

        The Company’s certificate of incorporation provides that no director of the Company shall be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except (i) for any breach of the directors’ duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit. The Company’s certificate of incorporation also provides that if Delaware law is amended to permit further elimination or limitation of personal liability of directors, then the liability of the Company’s directors will be eliminated or limited to the fullest extent permitted by Delaware law, as so amended.

        The foregoing summary of the indemnification and limitation of liability of officers and directors pursuant to the Company’s certificate of incorporation, bylaws and the indemnification agreements entered into between the Company and its directors and officers does not purport to be complete and is qualified in its entirety by reference to the Company’s certificate of incorporation, bylaws and the form of such indemnification agreements (as applicable), which are filed as Exhibits (e)(2), (e)(3) and (e)(4), respectively, to this Statement and are incorporated herein by reference.

Item 4.    The Solicitation or Recommendation.

Solicitation/Recommendation

        After careful consideration, including a thorough review of the terms and conditions of the Offer in consultation with the Company’s independent financial and legal advisors, and consistent with its fiduciary duties under applicable law, the Board, by unanimous vote at a meeting on June 20, 2019, determined that the Offer substantially undervalues the Company and is low-value, highly conditional and opportunistic and that the Offer is not in the best interests of the Company or its stockholders. Accordingly, for the reasons described in more detail below, the Board unanimously recommends that the Company’s stockholders REJECT the Offer and NOT tender their Shares pursuant to the Offer.

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        If you have tendered your Shares, you can withdraw them. For assistance in withdrawing your Shares, you can contact your broker or the Company’s information agent, MacKenzie Partners, Inc. (“MacKenzie Partners”), at the address and phone number below.

MacKenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
Toll free: (800) 322-2885
Collect: (212) 929-5500

        A copy of the press release and letter to the Company’s stockholders communicating the recommendation of the Board to reject the Offer are filed as Exhibits (a)(1) and (a)(2) to this Statement, respectively, and are incorporated herein by reference.

Background of the Offer and Reasons for Recommendation

Background of the Offer

        On April 30, 2019, the Chief Executive Officer of Crane, Max Mitchell, telephoned Scott Buckhout, the Company’s President and Chief Executive Officer, to inform Mr. Buckhout of Crane’s plan to submit a written unsolicited, non-binding proposal. Following the call, Mr. Mitchell sent an email to Mr. Buckhout that included a letter, dated April 30, 2019, containing Crane’s unsolicited, non-binding proposal (the “April 2019 Proposal”) to purchase all of the outstanding Shares for $45.00 per share in cash. That same day, Mr. Buckhout forwarded the April 2019 Proposal to the Board. The letter dated April 30, 2019 from Mr. Mitchell to Mr. Buckhout read as follows:

Max H. Mitchell
President and
Chief Executive Officer
April 30, 2019

Board of Directors
CIRCOR International, Inc.
30 Corporate Drive, Suite 200
Burlington, MA 01803
Attn: Mr. Scott A. Buckhout, President and Chief Executive Officer

VIA email and UPS

Dear Scott:

        Thank you for speaking with me today. I write to confirm Crane Co.’s (“Crane”) interest in acquiring CIRCOR International, Inc. (“CIRCOR”) in an all-cash transaction. We believe that our proposal provides an outstanding opportunity for your stockholders to realize a significant premium to the current trading price of CIRCOR shares and to enjoy immediate liquidity, while eliminating the business execution risks associated with CIRCOR’s stand-alone strategic plan. The combined company will have a larger platform and greater growth potential, providing CIRCOR’s customers with improved product and service offerings and creating enhanced advancement opportunities for CIRCOR’s employees.

        Price:     Crane proposes to acquire all of the issued and outstanding shares of CIRCOR for $45.00 per share in cash. Our proposal represents:

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A premium of 33% over the closing share price on April 30, 2019



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A premium of 52% over the previous 90 trading day volume weighted average share price



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A last twelve months EBITDA multiple of 13.5x as of March 31, 2019

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        Financing:     We expect to have full financing commitments at the time we enter into a definitive agreement. Our definitive agreement will not include a financing contingency.

        Due diligence:     We have reviewed CIRCOR’s publicly available information, and have a focused list of additional due diligence questions. In order to submit a final proposal, we will need to complete normal course due diligence. We are prepared to dedicate all necessary resources to complete due diligence expeditiously.

        Approvals:     This proposal has the full support of the Crane Board of Directors. We would negotiate the definitive merger agreement in parallel with our due diligence, with the aim of approving and executing it shortly after completing our due diligence. We do not anticipate any significant regulatory hurdles to closing the transaction promptly after signing a merger agreement. In addition to completion of our confirmatory due diligence review, our proposal is subject to customary conditions, including, among others, negotiation and execution of a mutually satisfactory merger agreement, and approval by the Crane Board of Directors.

        Next Steps:     Because of the compelling value to CIRCOR stockholders represented by our proposal, we hope you will provide us with access to the non-public information necessary to confirm our proposal. To that end, our leadership team, together with our advisors, will make ourselves available to meet with you to discuss all aspects of our proposal and answer any questions you may have at your earliest convenience.

        Confidentiality and Timing:     We prefer to conduct our negotiations with you privately and quickly. Therefore, we look forward to your response to our proposal by May 13, 2019. This letter is being submitted to you on the understanding that the existence of this letter and its contents will be kept confidential and will not be disclosed to anyone other than CIRCOR’s Board of Directors, senior officers, and financial and legal advisors.

        This letter and our proposal constitute only a preliminary non-binding indication of interest to acquire the outstanding shares of CIRCOR. This letter does not create or constitute any legally binding obligation or commitment by us regarding the proposed transaction, and there will be no legally binding agreement between us regarding the proposed transaction unless and until a definitive merger agreement is executed by Crane and CIRCOR.

        Please feel free to contact me directly as needed.

        I hope that you and the CIRCOR Board of Directors will recognize the outstanding opportunity for your stockholders represented by our proposal. We look forward to working together with you to complete the transaction on mutually agreeable terms.

Sincerely yours,

/s/ Max H. Mitchell
Max H. Mitchell
President and Chief Executive Officer

        On May 3, 2019, Mr. Buckhout sent an email to Mr. Mitchell acknowledging receipt of the April 2019 Proposal and confirming that the Board would give the April 2019 Proposal careful consideration. Mr. Mitchell replied by return email later that same day, thanking Mr. Buckhout for the Board’s consideration.

        On May 8 and May 9, 2019, the Board held a regularly scheduled meeting at which representatives from J.P Morgan Securities LLC, the Company’s financial advisor (“J.P. Morgan”), and Ropes & Gray LLP, the Company’s outside legal counsel (“Ropes & Gray”), were present for portions of the meeting. During the meeting, the Board discussed the April 2019 Proposal. A representative from

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Ropes & Gray reviewed with the Board its fiduciary duties with respect to the April 2019 Proposal. Representatives from J.P Morgan discussed the April 2019 Proposal and J.P. Morgan’s analysis of that proposal. After discussion, the Board concluded that the April 2019 Proposal was highly opportunistic, substantially undervalued the Company and its future prospects, and did not constitute a basis for engaging in further dialogue with Crane at the time. The Board directed Mr. Buckhout to communicate to Mr. Mitchell that the Board had determined not to proceed with discussions with Crane on the basis of the April 2019 Proposal.

        On May 13, 2019, Mr. Buckhout sent an email to Mr. Mitchell that included a letter, dated May 13, 2019, that stated that the Board, in consultation with its independent financial and legal advisors, considered the April 2019 Proposal and, after careful consideration, determined not to pursue the April 2019 Proposal. The letter dated May 13, 2019, from Mr. Mitchell to Mr. Buckhout read as follows:

CONFIDENTIAL

May 13, 2019

Dear Max,

        The CIRCOR Board of Directors, with the assistance of independent financial and legal advisors, met at our regularly scheduled board meeting last week. During that meeting we considered your unsolicited, non-binding proposal, dated April 30, 2019, to acquire CIRCOR’s outstanding equity.

        After careful consideration, the Board unanimously determined not to pursue your proposal.

Sincerely,

/s/ Scott A. Buckhout
Scott A. Buckhout
President and Chief Executive Officer
CIRCOR International, Inc.

        On May 21, 2019, at approximately 6:30 a.m. Eastern Time, Crane issued a press release publicly announcing the April 2019 Proposal. The full text of the press release is set forth below:

Crane Co. Announces All-Cash Proposal to Acquire CIRCOR at a Significant Premium

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All-cash proposal represents a 47% premium over the market close yesterday, and 37% and 51% premiums over the three- and six-month volume weighted average share prices, respectively



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Provides a superior alternative to CIRCOR’s prospects as a standalone company



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Provides certainty of value for CIRCOR shareholders

        May 21, 2019, Stamford, Conn.—Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered industrial products, today announced that it has submitted a proposal to the Board of Directors of CIRCOR International, Inc. (NYSE: CIR) or “CIRCOR,” to acquire CIRCOR for $45 per share in cash. The proposal represents a 47% premium over yesterday’s closing price and a 37% and 51% premium over a three- and six-month volume weighted average share price, respectively. This reflects an enterprise value of approximately $1.7 billion at a multiple of approximately 13.5x the last 12-month adjusted EBITDA.

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        Crane Co. proposed the all-cash transaction to CIRCOR’s President and CEO Scott Buckhout on April 30, 2019, the terms of which were confirmed by a letter to the CIRCOR Board of Directors. On May 13, the CIRCOR Board summarily rejected Crane Co.’s proposal with no offer of discussions or due diligence.

        “While we had hoped to complete a transaction privately, the Board’s rejection of our proposal without comment or discussion led to our decision to make our proposal known to CIRCOR shareholders so they can express their views directly to the CIRCOR Board,” said Max Mitchell, Crane Co. President and Chief Executive Officer. “Our proposal provides CIRCOR shareholders with attractive value and certainty compared to the continued uncertainty surrounding CIRCOR’s plans to improve operating performance. Based on CIRCOR’s history of underperformance and inability to meet its own financial targets, we believe CIRCOR’s standalone plan is unlikely to generate value comparable to what we are proposing.”

        Mr. Mitchell continued, “We believe that this business, which has great brands and products, has been meaningfully undermanaged for years. This has resulted in a persistent decline in CIRCOR’s share price, making it the worst performer of the peers in the S&P Midcap Capital Goods Index since the end of 2013. Based upon the strength of our disciplined operating approach, Crane Co. is well positioned to integrate CIRCOR’s businesses into our focused portfolio, realize operational synergies, and deliver long-term value to Crane shareholders. Combining CIRCOR’s Fluid Handling, Aerospace and Defense assets with Crane’s portfolio of leading brands would create a stronger competitor with additional scale and growth potential.”

        Crane Co. is highly confident that the proposed transaction could occur expeditiously:

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Transaction will not be subject to a financing contingency.



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Significant resources available to complete confirmatory due diligence.



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Crane and CIRCOR are complementary businesses with no expected regulatory delays.

Advisors

        Crane Co. has retained Wells Fargo Securities as its financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP as its legal advisor.

Investor Conference Call

        Crane Co. will host a conference call with the financial community at 8:30 a.m. EDT today. To participate on the conference call, please dial (877) 407-6184. The live webcast of the investor call, as well as related presentation materials, will be available through the Investor Relations section of the company’s website (www.craneco.com/investors).

        Crane Co. is a diversified manufacturer of highly engineered industrial products. Founded in 1855, Crane Co. provides products and solutions to customers in the chemicals, oil & gas, power, automated payment solutions, banknote design and production and aerospace & defense markets, along with a wide range of general industrial and consumer related end markets. The Company has four business segments: Fluid Handling, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials. Crane Co. has approximately 12,000 employees in the Americas, Europe, the Middle East, Asia and Australia. Crane Co. is traded on the New York Stock Exchange (NYSE:CR). For more information, visit www.craneco.com.

         This press release may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current beliefs, expectations, plans, assumptions and objectives regarding the future financial performance of Crane Co. (the “Company”) and CIRCOR International, Inc. (“CIRCOR”) and are subject to significant risks and

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uncertainties. Such risks and uncertainties include, but are not limited to, risks related to the expected timing and likelihood of completion of a potential transaction between the Company and CIRCOR, including the risk that the potential transaction may not occur, and the risk that any announcements relating to the potential transaction could have adverse effects on the market price of the Company’s or CIRCOR’s common stock. Any discussions contained in this presentation, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in these forward-looking statements. Such factors are detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, CIRCOR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and subsequent reports filed with the Securities and Exchange Commission (the “SEC”), and will be found in the definitive proxy statement that will be filed with the SEC by CIRCOR if a negotiated transaction is agreed to. Such reports are available on the SEC’s website (www.sec.gov). The Company does not undertake to update any forward-looking statements.

Additional Information and Where to Find It

         This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This communication does not constitute a solicitation of a proxy from any stockholder. This communication relates only to a proposal that the Company has made for a business combination with CIRCOR. In furtherance of the acquisition proposal, and subject to future developments, the Company and CIRCOR may file additional relevant materials with the SEC, including that CIRCOR will file a preliminary proxy statement on Schedule 14A if a negotiated transaction is agreed to. Following the filing of the definitive proxy statement with the SEC (if and when available), CIRCOR will mail the definitive proxy statement and a proxy card to each stockholder entitled to vote at the special meeting relating to the proposed transaction. INVESTORS ARE URGED TO READ THE PROXY STATEMENT IF AND WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors may obtain the proxy statement, as well as other filings containing information about the Company and CIRCOR, free of charge, from the SEC’s Web site (www.sec.gov). Investors may also obtain the Company’s SEC filings in connection with the transaction, free of charge, from the Company’s Web site (www.craneco.com).

Investor Contacts:

Jason D. Feldman
Director, Investor Relations
203-363-7329
superiorvalue@craneco.com
www.craneco.com

Scott Winter / Larry Miller / Gabrielle Wolf
Innisfree M&A Incorporated
212-750-5833

Media Contacts:

Tom Davies / Molly Morse
Kekst CNC
212-521-4873 / 212-521-4826
Tom.davies@kekstcnc.com /
Molly.morse@kekstcnc.com

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        On May 21, 2019, Mr. Mitchell also sent a letter to the Board, which read as follows:

May 21, 2019

Board of Directors
CIRCOR International, Inc.
30 Corporate Drive, Suite 200
Burlington, MA 01803
Attn: Mr. Scott A. Buckhout, President and Chief Executive Officer

Dear Members of the Board of Directors:

        We are extremely disappointed by the CIRCOR International, Inc. (“CIRCOR”) Board of Director’s rejection of our proposal to acquire CIRCOR as communicated in our letter to the Board dated April 30, 2019. CIRCOR’s refusal to engage with us continues a pattern of rejections of private acquisition proposals we have made in the past. Our all-cash proposal provides an attractive premium to CIRCOR shareholders, and eliminates the uncertainty associated with CIRCOR’s ability to execute its standalone business plan. In light of the Board’s intransigence, we will be making our proposal public so that CIRCOR shareholders can evaluate the merits of our proposal and make their views known to the CIRCOR Board.

        We urge the CIRCOR Board to engage with us on a transaction that is clearly in the best interests of your shareholders, consistent with the Board’s fiduciary duties. We stand ready to complete confirmatory due diligence expeditiously and are confident this transaction can be completed quickly.

Sincerely,

/s/ Max H. Mitchell

Max H. Mitchell
President and Chief Executive Officer

        At approximately 8:30 a.m. Eastern Time on May 21, 2019, Mr. Mitchell and Jason Feldman, Crane’s Director of Investor Relations, held an investor conference call to discuss the April 2019 Proposal.

        On May 21, 2019, at approximately 1:30 p.m. Eastern Time, the Company issued a press release, the full text of which is set forth below:

FOR IMMEDIATE RELEASE

CIRCOR Confirms Receipt and Reiterates Rejection of Unsolicited Proposal from Crane

        BURLINGTON, Mass., May 21, 2019 —CIRCOR International, Inc. (NYSE: CIR) (“CIRCOR”) today confirmed that it has previously received and rejected an unsolicited, non-binding proposal from Crane Co. (NYSE: CR) (“Crane”) to acquire all the outstanding shares of CIRCOR common stock for $45 per share in cash.

        Crane’s proposal, which was publicized today, was received by CIRCOR on April 30, 2019. Consistent with its fiduciary duties and in consultation with its independent legal and financial advisors, CIRCOR’s board of directors carefully reviewed that proposal. Following that review, the board of directors unanimously rejected Crane’s proposal and determined that the proposal was highly opportunistic, substantially undervalued CIRCOR and its future prospects, and did not constitute a basis for engaging in further dialogue with Crane at this time.

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        CIRCOR has a proven track record of executing on its strategic priorities to invest in growth and expand margins and has taken and continues to take action to improve cash flow and strengthen the company’s balance sheet. CIRCOR has:

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Successfully deployed capital toward transformative and accretive acquisitions that have repositioned the company in growing markets and have met or exceeded ROIC targets. CIRCOR is on track to achieve its committed cost synergies of $23 million at the end of year three of the Fluid Handling acquisition, one year earlier than originally planned;



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Driven solid execution in Industrial business with significant margin expansion for the full year 2018;



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Transformed the Aerospace & Defense business, driving substantial operational and financial performance improvement;



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Reshaped its oil and gas portfolio in response to sustained macro headwinds and deployed capital to diversify into higher margin industrial businesses;



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Prudently managed its product portfolio through regular strategic reviews, resulting in a number of divestitures of non-core businesses. CIRCOR continues to evaluate the sale of additional non-core assets to simplify the company, strengthen the portfolio and reduce debt; and



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Strengthened its balance sheet, having reduced its debt by $96 million since June 30, 2018.

        J.P. Morgan Securities LLC is acting as financial advisor, and Ropes & Gray LLP is acting as legal counsel to CIRCOR.

About CIRCOR

        CIRCOR International, Inc. designs, manufactures and markets differentiated technology products and sub-systems for markets including oil & gas, industrial, aerospace & defense and commercial marine. CIRCOR has a diversified flow and motion control product portfolio with recognized, market-leading brands that fulfill its customers’ mission critical needs. CIRCOR’s strategy is to grow organically and through complementary acquisitions; simplify CIRCOR’s operations; achieve world class operational excellence; and attract and retain top talent. For more information, visit CIRCOR’s investor relations website at http://investors.circor.com.

Forward Looking Statements

        This press release contains forward-looking statements within the meaning of Section 21 E of the Securities Exchange Act of 1934, as amended. Reliance should not be placed on forward-looking statements because they involve unknown risks, uncertainties and other factors, which are, in some cases, beyond the control of CIRCOR. Any statements in this press release that are not statements of historical fact are forward-looking statements, including, but not limited to, those relating to CIRCOR’s future performance and strategic priorities and its plans to evaluate the sale of non-core assets, strengthen its portfolio and reduce debt. Actual events, performance or results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. Important factors that could cause actual results to vary from expectations include, but are not limited to: our ability to respond to competitive developments and to grow our business, both domestically and internationally; changes in the cost, quality or supply of raw materials; our ability to comply with our debt obligations; our ability to successfully implement our acquisition, divestiture or restructuring strategies, including our integration of the Fluid Handling business; changes in industry standards, trade policies or government regulations, both in the United States and internationally; and our ability to operate our manufacturing facilities at current or higher levels and respond to increases in manufacturing costs. BEFORE MAKING ANY INVESTMENT DECISIONS REGARDING

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CIRCOR, WE STRONGLY ADVISE YOU TO READ THE SECTION ENTITLED “RISK FACTORS” IN OUR MOST RECENT ANNUAL REPORT ON FORM 10-K AND SUBSEQUENT REPORTS ON FORMS 10-Q, WHICH CAN BE ACCESSED UNDER THE “INVESTORS” LINK OF OUR WEBSITE AT WWW.CIRCOR.COM. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Contacts

David F. Mullen
Senior Vice President Finance
CIRCOR International
(781) 270-1200

Matthew Sherman / Andi Rose
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449

        On May 24, 2019, the Board held a special telephonic meeting at which representatives from Joele Frank, Wilkinson Brimmer Katcher, the Company’s investor relations consultant (“Joele Frank”); MacKenzie Partners; J.P. Morgan; and Ropes & Gray were present. During the meeting, the Board discussed Crane’s public disclosure of the April 2019 Proposal. The Ropes & Gray representative reviewed with the Board its fiduciary duties and discussed with the Board the Company’s structural takeover defenses. The representatives from Joele Frank and J.P. Morgan discussed with the Board investor and analyst feedback regarding the April 2019 Proposal. The representatives collectively discussed with the Board the potential actions Crane may take with respect to the April 2019 Proposal.

        On May 28, 2019, Mr. Mitchell sent an email to Mr. Buckhout requesting a call to discuss the April 2019 Proposal. Mr. Buckhout communicated Mr. Mitchell’s message to the Board and responded to Mr. Mitchell later that same day with an email reiterating the Board’s rejection of the April 2019 Proposal and offering to make arrangements to speak if Mr. Mitchell had anything new or different to discuss. Later that same day, Mr. Mitchell sent an additional email to Mr. Buckhout reiterating his request for a discussion but without a revised proposal. Mr. Buckhout responded to Mr. Mitchell by email on May 31, 2019, stating that it was not the time to speak, but indicating that they could revisit having a discussion in the future.

        On June 4, 2019, at approximately 8:49 a.m. Eastern Time, Crane issued a press release reiterating the April 2019 Proposal. The full text of the press release is set forth below:

Crane Co. Reiterates Proposal to Deliver Significant Value to CIRCOR Shareholders

•

Crane Co. remains firmly committed to pursuing its proposal to acquire CIRCOR



•

CIRCOR shareholders have expressed strong support for engagement and frustration with status quo following Crane’s May 21, 2019 Investor Call



•

Proposal presents a compelling opportunity for CIRCOR shareholders to realize immediate and certain value



•

Willing to adjust proposal if CIRCOR Board engages and provides justification

        June 4, 2019, Stamford, Conn.—(BUSINESS WIRE)—Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered industrial products, today sent a letter to the Board of Directors of CIRCOR International, Inc. (NYSE: CIR) in which Crane Co. reaffirmed its desire to enter into meaningful discussions regarding a transaction that would provide a significant premium for CIRCOR

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shareholders. This letter follows the CIRCOR Board of Directors’ rejection of Crane Co.’s initial $45 per share all-cash proposal without comment or discussion.

        The full text of the letter can be found below:

June 4, 2019

Dear Members of the CIRCOR Board of Directors:

        I write to reiterate Crane Co.’s strong interest in acquiring CIRCOR International, Inc. in an all-cash transaction. We continue to believe that our proposal to acquire CIRCOR represents a compelling opportunity for CIRCOR shareholders, providing a significant premium and certainty of value. Market reaction and feedback from CIRCOR shareholders indicate strong support for engagement and frustration with the status quo.

        We continue to believe our proposal of $45 per share is full and fair based on public information available to us. We are willing, however, to consider adjusting the price in our proposal if CIRCOR management engages with us and provides sufficient justification.

        When the Board of Directors rejected our proposal, it did so without any comment or invitation for a discussion. CIRCOR’s subsequent press release, which was issued in response to Crane’s public disclosure of its proposal, provided no significant rationale for its rejection. The absence of a substantive response from the Board of Directors was a disservice to CIRCOR shareholders.

        We are fully committed to pursuing our proposal. Given the strength of CIRCOR shareholder support, absent engagement, we will assess additional actions available to us in furtherance of the proposed transaction.

        This is a compelling opportunity to provide your shareholders with certainty of value at a significant premium, and to offer your employees and customers the ability to thrive under Crane Co.’s stewardship. We urge the Board of Directors to honor their fiduciary duties and promptly engage in meaningful, good-faith discussions with us.

Sincerely yours,
/s/ Max H. Mitchell
Max H. Mitchell
President and Chief Executive Officer

Advisors

        Crane Co. has retained Wells Fargo Securities as its financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP as its legal advisor.

About Crane Co.

        Crane Co. is a diversified manufacturer of highly engineered industrial products. Founded in 1855, Crane Co. provides products and solutions to customers in the chemicals, oil & gas, power, automated payment solutions, banknote design and production and aerospace & defense markets, along with a wide range of general industrial and consumer related end markets. The Company has four business segments: Fluid Handling, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials. Crane Co. has approximately 12,000 employees in the Americas, Europe, the Middle East, Asia and Australia. Crane Co. is traded on the New York Stock Exchange (NYSE:CR). For more information, visit www.craneco.com.

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Forward-Looking Statements—Disclaimer

         This press release may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current beliefs, expectations, plans, assumptions and objectives regarding the future financial performance of Crane Co. (the “Company”) and CIRCOR International, Inc. (“CIRCOR”) and are subject to significant risks and uncertainties. Such risks and uncertainties include, but are not limited to, risks related to the expected timing and likelihood of completion of a potential transaction between the Company and CIRCOR, including the risk that the potential transaction may not occur, and the risk that any announcements relating to the potential transaction could have adverse effects on the market price of the Company’s or CIRCOR’s common stock. Any discussions contained in this communication, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in these forward-looking statements. Such factors are detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, CIRCOR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and subsequent reports filed with the Securities and Exchange Commission (the “SEC”), and will be found in the definitive proxy statement that will be filed with the SEC by CIRCOR if a negotiated transaction is agreed to. Such reports are available on the SEC’s website (www.sec.gov). The Company does not undertake to update any forward-looking statements.

Additional Information and Where to Find It

        This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This communication does not constitute a solicitation of a proxy from any stockholder. This communication relates only to a proposal that the Company has made for a business combination with CIRCOR. In furtherance of the acquisition proposal, and subject to future developments, the Company and CIRCOR may file additional relevant materials with the SEC, including that CIRCOR will file a preliminary proxy statement on Schedule 14A if a negotiated transaction is agreed to. Following the filing of the definitive proxy statement with the SEC (if and when available), CIRCOR will mail the definitive proxy statement and a proxy card to each stockholder entitled to vote at the special meeting relating to the proposed transaction. INVESTORS ARE URGED TO READ THE PROXY STATEMENT IF AND WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors may obtain the proxy statement, as well as other filings containing information about the Company and CIRCOR, free of charge, from the SEC’s Web site (www.sec.gov). Investors may also obtain the Company’s SEC filings in connection with the transaction, free of charge, from the Company’s Web site (www.craneco.com).

Contact:

Investors:
Jason D. Feldman
Director, Investor Relations
203-363-7329
superiorvalue@craneco.com
www.craneco.com

Scott Winter / Larry Miller / Gabrielle Wolf
Innisfree M&A Incorporated
212-750-5833

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Media:
Tom Davies / Molly Morse
Kekst CNC
212-521-4873 / 212-521-4826
Tom.davies@kekstcnc.com /
Molly.morse@kekstcnc.com

        On June 4, 2019, at approximately 4:30 p.m. Eastern Time, the Company distributed the following message to its investors:

        “As we’ve been communicating directly to you, and our other shareholders, soon we will be providing an update on our financial outlook and ongoing business transformation, including initiatives to drive growth, expand margins, and strengthen the balance sheet. We value the constructive engagement we have had with our shareholders and look forward to discussing further details regarding our plans to deliver shareholder value.”

        On June 6, 2019, the Board held a special meeting. Representatives from Evercore Group L.L.C. (“Evercore”), whom the Board, on June 1, 2019, had approved to engage as a Company financial advisor, attended a portion of the meeting, during which members of the Evercore team were introduced to the Board. During the meeting, at the direction of the Board, representatives of Evercore provided the Board with Evercore’s perspective on certain matters in connection with the April 2019 Proposal. In addition, management reviewed a presentation to be made to stockholders of the Company.

        On June 6, 2019, Crane sent the Company a demand to inspect, among other items, the Company’s stock ledger, a list of the Company’s stockholders and various other books and records of the Company (the “220 Demand Letter”).

        On June 13, 2019, the Board held a meeting at which representatives from J.P. Morgan, Evercore, Ropes & Gray, Joele Frank and MacKenzie Partners were present for portions of the meeting. During the meeting, at the direction of the Board, representatives of the advisors reviewed with the Board information regarding the status of the April 2019 Proposal. Management reviewed with the Board the near-term plans for the Company in response to the April 2019 Proposal. At the meeting, management reviewed the presentation to be made to stockholders of the Company, as well as the five (5)-year forecast for the Company.

        On June 13, 2019, representatives from Ropes & Gray sent an e-mail to representatives from Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”) in response to the 220 Demand Letter. On June 16, 2019, representatives from Ropes & Gray and Skadden executed a non-disclosure agreement, on behalf of their respective clients, regarding the provision of the materials subject to the 220 Demand Letter.

        On June 17, 2019, Crane and the Purchaser commenced the Offer for all of the outstanding Shares at the same $45.00 price per Share as the April 2019 Proposal. That morning, Crane and the Purchaser filed with the SEC the Schedule TO and Crane issued a press release announcing the commencement of the Offer.

        On June 17, 2019, at approximately 4:50 p.m. Eastern Time, the Company issued a “stop-look-and-listen” press release.

        On June 20, 2019, the Board held a special meeting for portions of which representatives from J.P. Morgan, Evercore and Ropes & Gray were present. At the meeting, the Ropes & Gray representative reviewed with the Board its fiduciary duties in the context of the Offer and discussed various options and the relevant timelines. The J.P. Morgan and Evercore representatives, independently, then discussed with the Board their respective financial analyses in respect of the Offer

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and the Proposed Merger. Each of J.P. Morgan and Evercore rendered an oral opinion to the Board, which was subsequently confirmed in writing, that, as of the date of such opinion, and based upon and subject to the factors, assumptions, limitations and qualifications set forth in the written opinion, the consideration proposed to be paid to the stockholders (other than Crane and any of its affiliates) pursuant to the Offer was inadequate from a financial point of view to such holders. The full text of the written opinions of J.P. Morgan and Evercore, each dated June 20, 2019, which set forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinions, is attached hereto as Annexes B and C, respectively. The Board then discussed the Offer and potential responses thereto. During this discussion, the Board considered potentially countervailing factors and risks, including the fact that the Offer, if consummated, would provide stockholders with certainty of value and liquidity; the fact that the financial improvements discussed below may not be realized; and the fact that the consummation of the Offer is not conditioned on Crane obtaining financing. Following discussion, the Board unanimously determined that the Offer substantially undervalues the Company and is low-value, highly conditional and opportunistic and that the Offer is not in the best interests of the Company or its stockholders.

Reasons for the Recommendation

        After careful consideration, including a thorough review of the terms and conditions of the Offer with the Company’s financial advisors and outside legal counsel, the Board has unanimously determined that the Offer is inadequate and not in the best interests of the Company or its stockholders.

        In reaching its determination to reject the Offer, the Board considered numerous reasons in consultation with the Company’s management and its financial advisors and outside legal counsel, including but not limited to, the following:

The Offer is inadequate and substantially undervalues the Company.

•

The Board believes that execution of the Company’s strategic plan will deliver significantly greater value in the near-term and the long-term for the Company’s stockholders.



•

The Company is executing a detailed plan to deliver substantial earnings growth, while deleveraging the Company, over the next eighteen (18) months. The Company expects the strategic plan to generate significant stockholder value. The Company is confident in its outlook because it is based largely on actions in its control, as well as a higher visibility business mix as a result of the transformation. In addition, the outlook includes cost actions that have been executed or are in the process of being executed. The Company’s strategic plan includes:



•

delivering 2020 adjusted EBITDA of $165 million, up 37% over pro forma 2018;



•

expanding adjusted EBITDA margin to 14.9% in 2020, up from 10.8% in pro forma 2018; and



•

reducing the Company’s net leverage ratio from 5.5x in pro forma 2018 to approximately 3.5x in 2020.



•

In addition to the upside from the Company’s strategic plan, further upside opportunities could drive substantial additional stockholder value. Continued portfolio optimization and non-core divestitures may contribute to further debt reduction and potential multiple expansion. Also, although the Company has taken a conservative view of its prospects in cyclical markets (upstream oil & gas, commercial marine), a recovery in those markets could drive additional earnings growth and cash generation.

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The Company has strengthened and streamlined the business, positioning itself for increased revenue and profitability growth.

•

Eighty-three percent (83%) of the Company’s revenue in 2018 is from less cyclical, diversified end markets, up from forty-four percent (44%) in 2014.



•

Seventy-five percent (75%) of the Company’s revenue in 2018 is from differentiated products, up from forty-six percent (46%) in 2014.



•

Twenty-six percent (26%) of the Company’s revenue in 2018 is higher-margin aftermarket, up from six percent (6%) in 2014.



•

The Company simplified and streamlined the business across multiple fronts (each of the following excludes the impact of acquired businesses):



•

reduced its manufacturing footprint with an approximately forty percent (40%) decrease in the number of factories since 2014 and significantly improved scale at remaining factories;



•

increased supplier efficiency, which has yielded material savings and improved both quality and delivery, as the Company has reduced its number of suppliers by approximately fifty-five percent (55%) since 2014, helping to drive annual savings of $9 million, net of inflation, over the last three (3) years;



•

decreased the number of business units by approximately forty-five percent (45%) since 2014, resulting in a significant reduction in overhead staff, market and customer aligned business units and increased business scale that attracts stronger talent; and



•

streamlined the number of enterprise resource planning systems, with an approximately forty-five percent (45%) decrease in the number of systems since 2014, which has enabled consistent best practices and lowered risk by eliminating unsupported systems.

The Company has taken significant actions to de-risk and transform the business into a diversified global flow control technology company.

•

The Company reduced exposure to upstream oil & gas by repositioning the Company during an unprecedented and protracted downturn in the upstream oil & gas market.



•

The Company has taken aggressive actions inside the energy group, including executing non-core divestitures, exiting unprofitable businesses, consolidating factories and significant simplification and restructuring.



•

The Company has made significant investments to grow and improve the aerospace & defense business. The Company has driven aerospace & defense adjusted EBITDA from $22 million in 2014 to $40 million in 2018, an increase of eighty-two percent (82%), and expanded adjusted EBITDA margin by over 630bps.



•

The Company also transformed its small industrial business into its largest group as part of the Colfax Fluid Handling integration. In 2018, the Company increased the industrial group’s adjusted EBITDA by approximately forty percent (40%) and adjusted EBITDA margins by 350bps versus 2017 combined results. The substantial increase in results was driven by synergies, G&A reduction, value pricing and the implementation of the CIRCOR Operating System. The Company also launched nine (9) new products in 2018, and expects to launch an additional nine (9) new products in 2019. The Industrial Group ended 2018 with a record backlog.

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Recent investments are expected to drive additional future growth.

•

The Company has transformed its portfolio by deploying capital on accretive acquisitions. The recent acquisitions of Critical Flow Solutions, a high technology business serving the downstream oil & gas market, and Colfax Fluid Handling, a severe-service pump technology business with diversified end markets and significant aftermarket exposure, greatly improved the quality of the Company’s revenues and profitability. Both acquisitions are performing well and are exceeding initial synergy targets. Both are delivering a strong return on invested capital, including



•

10.7% in 2018 (year two) for Critical Flow Solutions, which is expected to be more than 12% by year three; and



•

8.8% in 2018 (year one) for Colfax Fluid Handling, which is expected to be more than 11% by year three.



•

The Company has invested in organic growth by expanding sales and engineering across the Company while establishing a Product Management function that did not exist five (5) years ago. In 2019, the Company anticipates launching at least thirty-five (35) new products, an approximately forty-five percent (45%) increase over 2018. Products launched within three (3) years of the current year are expected to generate approximately $70 million of revenue in 2019.

The Offer is opportunistically timed.

•

The Offer is opportunistically timed just as the Company is poised to deliver substantial value associated with its transformation, taking away value that rightfully belongs to the Company’s stockholders.



•

The Offer was made at a time when the Company’s stock price was in the process of a rapid upswing with significant momentum; prior to the Offer, the Company’s stock was up forty-four percent (44%) year-to-date.



•

The Offer was made prior to the Company’s release of its current 2020 financial targets, which imply substantial value creation.



•

Crane attempts to take advantage of the Company’s temporarily elevated leverage levels, although the Company has a clear line of sight into significant deleveraging. Net leverage is expected to be down 2x to approximately 3.5x by 2020.



•

The Offer represents a price that is fourteen percent (14%) below the Company’s 52-week high.



•

Crane is attempting to justify its undervalued Offer by making inaccurate statements and focusing on the Company’s past product portfolio and the impact of headwinds in upstream oil & gas—failing to recognize our recent transformation and opportunities for near-term value creation.

The Board has received an inadequacy opinion from each of its financial advisors.

•

The Board considered the fact that its financial advisor J.P. Morgan rendered an oral opinion to the Board, which was subsequently confirmed in writing, that, as of the date of such opinion, and based upon and subject to the factors, assumptions, limitations and qualifications set forth in the written opinion, that the consideration proposed to be paid to the Company’s stockholders pursuant to the Offer is inadequate, from a financial point of view, to such holders. The full text of the written opinion of J.P. Morgan, dated June 20, 2019, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached hereto as Annex B. J.P. Morgan provided its opinion to the Board

27

(in its capacity as such) in connection with and for purposes of its evaluation of the Offer. The opinion of J.P. Morgan does not constitute a recommendation to any holder of Shares as to whether such holder should tender Shares in the Offer.

•

The Board considered the fact that its financial advisor Evercore rendered an oral opinion to the Board, which was subsequently confirmed in writing, that, as of the date of such opinion, and based upon and subject to the factors and assumptions set forth in the written opinion, that the consideration proposed to be paid to the Company’s stockholders (other than Crane and any of its affiliates) pursuant to the Offer is inadequate from a financial point of view to such holders. The full text of the written opinion of Evercore, dated June 20, 2019, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached hereto as Annex C. Evercore provided its opinion for the information and benefit of the Board (in its capacity as such) in connection with its evaluation of the Offer and the Proposed Merger. The opinion of Evercore does not constitute a recommendation to the Board or to any other person in respect of the Offer or the Proposed Merger, including as to whether any person should tender Shares in the Offer or take any other action in respect of the Offer or the Proposed Merger.

The conditions to the Offer create significant uncertainty and risk.

•

The Offer contains numerous conditions, including, among many others, the Minimum Tender Condition, the Merger Agreement Condition, the Section 203 Condition, the Antitrust Condition and the Impairment Condition. See also “ Item 2—Identity and Background of Filing Person—Tender Offer ” above and Annex A hereto. As a result, the Offer puts the Company and its stockholders at substantial risk that it will never be consummated.



•

The Offer includes conditions providing the Purchaser broad discretion to decide not to purchase the Shares. For example, the Offer provides that if at any time prior to the consummation of the Offer, there occurs any change in the general political, market, economic or financial conditions in the United States or elsewhere that, in Crane’s reasonable judgment, could have a material adverse effect on the business, assets, liabilities, financial condition, capitalization, operations, results of operations or prospects of the Company, Crane may terminate the Offer. In addition, the Offer provides that Crane may terminate the Offer if there is any decline in either the Dow Jones Industrial Average, the Standard and Poor’s Index of 500 Industrial Companies or the NASDAQ-100 Index by an amount in excess of fifteen percent (15%), measured from the close of business on June 14, 2019. The Offer also provides that Crane may terminate the Offer if the Company adopts a stockholder rights agreement.



•

There is no guarantee that the Offer can or will be completed as soon as Crane contemplates in its Offer materials. The Offer does not initially expire until July 16, 2019, and this date may be extended by Crane or the Purchaser, subject to compliance with applicable securities laws, in its sole discretion.



•

Crane and the Purchaser expressly reserves the right to amend the terms of the Offer at any time before it expires, including by decreasing the Offer price per Share or by changing the number of Shares being sought or the type of consideration.

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ACCORDINGLY, BASED ON THE FOREGOING, THE BOARD UNANIMOUSLY
RECOMMENDS THAT HOLDERS OF SHARES REJECT THE OFFER AND
NOT TENDER ANY OF THEIR SHARES PURSUANT TO THE OFFER.

        The foregoing discussion of the information and reasons identified by the Board is not intended to be exhaustive, but includes the material information, reasons and analyses considered by the Board in reaching its conclusions and recommendations. The members of the Board evaluated the various reasons listed above in light of their knowledge of the business, financial condition and prospects of the Company and considered the advice of the Board’s independent financial and legal advisors. In light of the number and variety of reasons that the Board considered, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the reasons summarized above in reaching its recommendation. In addition, individual members of the Board may have given different weight to different reasons. After considering the totality of the information and reasons, the Board unanimously rejected the terms of the Offer and recommended that holders of the Shares not tender their Shares pursuant to the Offer.

Intent to Tender

        Neither the Company nor, to the knowledge of the Company after making reasonable inquiry, any of the Company’s directors, executive officers, affiliates or subsidiaries intends to tender any Shares he, she or it holds of record or beneficially owns for purchase pursuant to the Offer.

Item 5.    Persons/Assets, Retained, Employed, Compensated or Used.

        Pursuant to a letter agreement dated as of May 15, 2019, as amended on June 21, 2019, the Company has retained J.P. Morgan as its financial advisor in connection with, among other things, the Company’s analysis and consideration of, and response to, the Offer. The Board selected J.P. Morgan based on its qualifications, expertise, reputation and knowledge of the industry in which the Company operates and its familiarity with the business and affairs of the Company. The Company has agreed to pay J.P. Morgan advisory fees as well as a potential transaction fee in the event of a sale. In addition, the Company has agreed to reimburse J.P. Morgan for its reasonable expenses in connection with its engagement and to indemnify J.P. Morgan against certain liabilities relating to or arising out of the engagement.

        Pursuant to a letter agreement dated as of June 15, 2019, the Company has retained Evercore as its financial advisor in connection with, among other things, the Company’s analysis and consideration of, and response to, the Offer. The Board selected Evercore based on its qualifications, expertise, reputation and relevant experience. The Company has agreed to pay Evercore advisory fees as well as a potential transaction fee in the event of a sale. In addition, the Company has agreed to reimburse Evercore for its reasonable expenses in connection with its engagement and to indemnify Evercore against certain liabilities relating to or arising out of the engagement.

        The Company has engaged MacKenzie Partners to provide advisory, consulting and solicitation services in connection with, among other things, the Offer. The Company has agreed to pay customary compensation for such services. In addition, the Company has agreed to reimburse MacKenzie Partners for its reasonable out-of-pocket expenses and to indemnify it against certain liabilities relating to or arising out of the engagement.

        The Company has also retained Joele Frank as its communications consultant in connection with the Offer. The Company has agreed to pay customary compensation for such services. In addition, the Company has agreed to reimburse Joele Frank for its reasonable out-of-pocket expenses and to indemnify it against certain liabilities resulting from, or relating to, materials prepared, or statements made, by Joele Frank based on information provided by the Company.

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        Except as set forth above, neither the Company nor any person acting on its behalf has or currently intends to employ, retain or compensate any person to make solicitations or recommendations to the security holders of the Company with respect to the Offer.

Item 7.    Purposes of the Transaction and Plans or Proposals.

        The Company routinely maintains contact with other participants in its industry regarding a wide range of business transactions. It has not ceased, and has no intention of ceasing, such activity as a result of the Offer. The Company’s policy has been, and continues to be, not to disclose the existence or content of any such discussions with third parties (except as may be required by law) as any such disclosure could jeopardize any future negotiations that the Company may conduct.

        Except as described in “ Item 4—Background of the Offer and Reasons for Recommendation—Background of the Offer ,” the Company is not currently undertaking or engaged in any negotiations in response to the Offer that relate to (i) a tender offer for, or other acquisition of, Shares by the Company, any of its subsidiaries or any other person, (ii) any extraordinary transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries, (iii) any purchase, sale or transfer of a material amount of assets of the Company or any of its subsidiaries or (iv) any material change in the present dividend rate or policy, or indebtedness or capitalization, of the Company.

        Notwithstanding the foregoing, the Company may in the future engage in negotiations in response to the Offer that could have one of the effects specified in the preceding paragraph, and the Company has determined that disclosure with respect to the parties to, and the possible terms of, any transactions or proposals of the type referred to in the preceding paragraph might jeopardize the discussions or negotiations that the Company may conduct. Accordingly, the Board has instructed management not to disclose the possible terms of any such transactions or proposals, or the parties thereto, unless and until an agreement in principle relating thereto has been reached or, upon the advice of counsel, as may otherwise be required by law.

        Except as described above or otherwise set forth in this Statement (including in the Exhibits to this Statement) or as incorporated in this Statement by reference, there are no transactions, resolutions of the Board, agreements in principle or contracts entered into in response to the Offer that relate to, or would result in, one or more of the events referred to in the second paragraph of this Item 7.

Item 8.    Additional Information.

Golden Parachute Compensation

        The following table sets forth the information required by Item 402(t) of Regulation S-K regarding certain compensation for each of the Company’s named executive officers that is based on or otherwise relates to the Offer and the Proposed Merger. For purposes of this table, the Company has assumed that the Offer, the Proposed Merger and any qualifying termination of employment occur on June 18, 2019 with respect to each named executive officer, the stock price is $45.00 per share, and no

30

withholding taxes or reductions for potential golden parachute excise taxes are applicable to any payments set forth in the table. The Company has rounded all dollar amounts to the nearest whole dollar.

        The table below describes the estimated potential payments to each of our named executive officers under the terms of their respective executive change of control agreements as amended from time to time, together with the value of the unvested Options, RSUs and PSUs that would be accelerated upon a change of control. The amounts shown in the table do not include the value of payments or benefits that would have been earned, or any amounts associated with equity awards that would vest pursuant to their terms, on or prior to the effective date of the Offer or the value of payments or benefits that are not based on or otherwise related to the Offer.

        The amounts shown in the table are estimates only and are based on assumptions and information available as of June 18, 2019. The actual amounts that may be paid upon an individual’s termination of employment can only be determined at the actual time of such termination, and are subject to reduction if doing so results in a larger net-after tax benefit for the named executive officer.