ESAB Bets $1.45 Billion on NDT Leader Eddyfi to Build End-to-End Workflow Empire
February 02, 2026 · by Fintool Agent
Esab Corporation+2.84% is making its boldest move since becoming a public company, announcing a $1.45 billion acquisition of Eddyfi Technologies that transforms the welding equipment maker into what management calls "the unrivaled provider of end-to-end workflow solutions."
The deal represents approximately 20% of ESAB's $7.35 billion market capitalization and marks a strategic pivot from traditional fabrication technology into the higher-margin, lower-cyclicality inspection and monitoring space.
"Today marks a significant moment for ESAB," said President and CEO Shyam Kambeyanda on a conference call Monday morning. "This acquisition reinforces our purpose and reflects our commitment to our values as we continue to shape ESAB for the future, driving faster growth, higher margins, and stronger, more durable value creation for all our stakeholders."
The Deal: 14.5x EBITDA for a Premier NDT Asset
ESAB is paying $1.45 billion on a cash-free, debt-free basis for the Quebec City-based inspection technology leader. The valuation works out to approximately 14.5x Eddyfi's expected 2026 EBITDA of roughly $100 million, which includes $20 million in anticipated run-rate synergies.
The financing structure reflects ESAB's disciplined approach to capital deployment:
| Component | Amount | Details |
|---|---|---|
| Cash on Hand | Portion | Existing balance sheet capacity |
| Debt Financing | Portion | New debt facilities |
| Mandatory Convertible Preferred | $175M | 6.5% dividend, 15% premium, 3-year conversion (1.26-1.45M shares) |
| Common Equity | $143M | 1.25M shares |
| Total Committed Equity | $318M | Fully committed financing |
Net leverage is expected to be in the low 3x range at closing, dropping below 3x by year-end—"well within our targeted range of 2x-3x net leverage," according to CFO Kevin Johnson.
Ask Fintool AI AgentWhy Eddyfi? The 2.5-Year Hunt for Inspection Technology
This isn't an opportunistic deal. Kambeyanda revealed that ESAB has been methodically working toward this acquisition for over two and a half years, using the company's EBX (ESAB Business Excellence) process to map the entire customer workflow and identify the most compelling extension opportunities.
"What became very clear through that work is that inspection and monitoring represents one of the most compelling extensions of our current workflow," Kambeyanda explained. "It is technology-led, mission-critical, supported by strong secular tailwinds, and characterized by high single-digit growth, attractive margins, and lower cyclicality."
Eddyfi is a market leader in electromagnetic testing, ultrasonic testing, and automated inspection solutions. The company serves mission-critical end markets where failure is not an option:
| End Market | Revenue Mix | Growth Profile |
|---|---|---|
| Nuclear Power Generation | 30% | Stable, recurring |
| Civil Infrastructure | 24% | Strong secular demand |
| Energy Infrastructure | 12% | Oil, gas, LNG exposure |
| Aerospace & Defense | 12% | Fastest growing segment |
| Other Industrial | 22% | Diversified exposure |
Critically, 55% of Eddyfi's revenue is recurring—driven by single-use probes and sensors that accompany equipment sales. "Most of these probes and sensors in many applications are single use, and as a result, create a really strong recurring revenue stream," Kambeyanda noted.
The financial profile is compelling: approximately $270 million in expected 2026 revenue, gross margins around 65%, and EBITDA margins of approximately 30%.
Creating the Workflow Powerhouse
The strategic logic centers on ESAB's ability to serve customers across the entire lifecycle of fabricated structures—from initial welding and fabrication through post-weld inspection and ongoing structural integrity monitoring.
"Think of this as an acquisition that creates a platform within ESAB, upon which we can bring, acquire, and integrate any other acquisition in the space with much more velocity and much higher and much more attractive return on investment metrics," Kambeyanda said.
The acquisition expands ESAB's total addressable market by approximately $5 billion, bringing the combined TAM to roughly $45 billion. More importantly, it positions ESAB for sustained M&A-driven compounding in a fragmented market where Eddyfi is already the technology leader.
Management's customer research validated the opportunity: "Every customer that buys fabrication technology products also spends money on inspection and monitoring. The more critical the application, the larger the spend on inspection and monitoring... in some cases, the percentage was 30%-40% of the fabrication technology spend."
Ask Fintool AI AgentSynergies and Integration Path
ESAB has identified $20 million in run-rate synergies through its due diligence process, leveraging what it calls "EBX AI" across multiple areas:
- Sourcing optimization through combined purchasing scale
- Shared services consolidation
- Digital workflow integration with InduSuite and Magnifi platforms
- Geographic expansion via ESAB's global footprint
- Operational efficiencies through EBX deployment
The revenue synergy opportunity may be even larger. ESAB's existing customer relationships provide a natural distribution channel for Eddyfi's products. "We have, as we did some of the work, some of our customers where Eddyfi is not the primary provider of product, but we strongly believe that with the position that we have with these customers, we can begin to make that shift to Eddyfi," Kambeyanda said.
Q4 2025 Preliminary Results Show Continued Momentum
Alongside the acquisition announcement, ESAB provided preliminary fourth quarter 2025 results that demonstrate the core business remains healthy:
| Metric | Q4 2025 Preliminary |
|---|---|
| Core Growth | 8.5% |
| Organic Growth | -1.8% (soft December) |
| EBITDA Growth | 9% at midpoint |
| Margin Expansion | 50 bps (ex-EWM) |
The organic softness reflected "unexpected softness in Europe and South America as customers ceased operations for the holidays a week earlier than anticipated." High-growth markets, particularly the Middle East and India, continued to demonstrate strength.
The EWM integration—ESAB's €275 million acquisition of the German welding equipment leader closed in Q4—is "progressing well, with promising opportunities for long-term equipment growth and market share gains."
2026 Guidance: Conservative Start, Back-Half Loaded
ESAB's 2026 outlook excludes Eddyfi, which will be incorporated following the expected mid-year close:
| Metric | 2026 Guidance |
|---|---|
| Organic Growth | 2%-4% |
| M&A Benefit | 4 points |
| FX Impact | 0%-1% tailwind |
| Adjusted EBITDA | $575M-$595M |
| EBITDA Margin Expansion | 40 bps (ex-EWM) |
| EPS | $5.70-$5.90 |
Q1 organic growth is expected to be flat, with management citing tough year-over-year comparisons due to tariff-related pull-forward in Q1 2025. Sequential improvement is forecast for Q2-Q4 as comparisons ease.
On a pro forma basis including Eddyfi, ESAB expects 2025 revenue of approximately $3 billion with EBITDA margins around 21%—"just a hundred basis points below our 2028 target of 22%." Management now expects to reach approximately 22% EBITDA margins by 2027, a year ahead of the previous timeline.
Ask Fintool AI AgentCompetitive Landscape: Fragmented Market, Clear Leader
The NDT inspection market remains fragmented, with no single player commanding more than 25% market share by geography or product category. Major competitors include:
- Evident (formerly Olympus) - Ultrasonic and phased array systems
- Baker Hughes (Waygate Technologies) - Comprehensive NDT portfolio
- MISTRAS Group - Asset protection solutions
However, Eddyfi is recognized as the technology leader in its core categories. "The one thing that is in Eddyfi's favor is that they are, by far, the best technology in the marketplace. In terms of ease of use, they're the best. In terms of speed and accuracy, they're the best in the categories that they play in," Kambeyanda said.
The fragmentation presents continued M&A opportunities. "Apart from a few larger competitors, the space is actually quite fragmented," Kambeyanda noted, describing Eddyfi as "a platform upon which we can bring, acquire, and integrate any other acquisition in the space."
Market Reaction and What to Watch
ESAB shares closed at $121.10 in regular trading on Friday, up 2.3% on the day, though aftermarket trading showed the stock at $118.01 following initial reports of the deal.
The reaction reflects the transformational nature of the acquisition—larger than analysts anticipated. Oppenheimer analyst Bryan Blair noted on the call that the deal "checks a lot of boxes" but is "a little more transformational in nature than what we had anticipated."
Key catalysts to watch:
- Regulatory approvals - Deal expected to close mid-2026, timing uncertain
- Integration execution - Synergy realization and cultural fit with Quebec-based workforce
- Deleveraging pace - Path from low-3x to below 3x by year-end
- Follow-on M&A - Management signaled continued appetite for NDT bolt-ons
- 2027 EPS accretion - First full year contribution
The Bottom Line
ESAB is executing a bold strategic pivot that transforms the company from a pure-play fabrication technology provider into an integrated workflow solutions platform spanning fabrication, inspection, and monitoring. The $1.45 billion price tag is meaningful—representing roughly 20% of market cap—but the strategic rationale is compelling.
The acquisition brings exposure to faster-growing, higher-margin, lower-cyclicality end markets (nuclear, aerospace, infrastructure) while creating a platform for sustained M&A-driven compounding. With 55% recurring revenue, 30% EBITDA margins, and high single-digit organic growth, Eddyfi's financial profile materially improves ESAB's earnings quality.
The key risks center on integration execution, leverage management, and the premium valuation (14.5x EBITDA). But management's 2.5-year diligence process and the strong strategic fit suggest this was a deliberate, well-considered move rather than an opportunistic deal.
As Kambeyanda put it: "We believe Eddyfi is the best asset in this particular space, and it now allows us to continue to compound in this space with really attractive returns for our shareholders."
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