Last checked at 
* KKR offers $76 per share for Garden Denver
* Offer a 3 pct premium to Garden Denver's Thursday close
* Shares rise to $74.83 in early trade
By A. Ananthalakshmi
March 8 (Reuters) - Industrial machinery maker GardnerDenver Inc agreed to sell itself to private equity firmKKR & Co LP for $3.74 billion after the buyout firmraised its offer.
The deal follows several months of a hot and cold auctionprocess that initially drew interest from diversifiedmanufacturer SPX Corp and other private equity firms butleft KKR as the only bidder at the end.
KKR will pay $76 for each Gardner Denver share, sweeteningits so-called final offer of $75 per share and representing a 39percent premium to the company's stock price on Oct. 24, the daybefore Reuters broke the news of a potential sale.
Shares of Gardner Denver rose 1 percent to $74.70 on the NewYork Stock Exchange on Friday, suggesting investors do notexpect a higher bid.
Including debt, the deal is valued at $3.9 billion, thecompanies said in a statement on Friday.
The Wayne, Pennsylvania-based company, which makescompressors, pumps and vacuum products for industrial uses,reported stronger-than-expected quarterly results late lastmonth, helped by a restructuring program at its Europeanoperations.
The company, however, forecast 2013 earnings belowexpectations, which analysts termed conservative. They havesince raised their price targets, saying the company's businesswas improving.
KKR has been in the pole position to clinch a deal afterother private equity bidders including Advent International, TPGCapital and Onex Corp, which initially took part in theauction, abandoned the process, people familiar with the matterhave told Reuters.
"We understand KKR's reluctance to bid against itself as thelast remaining bidder, but if $75 was unacceptable, then $76hardly seems like a victory," BB&T Capital Markets analyst KevinMaczka said.
SPX had offered to buy Gardner Denver for $85 per shareafter it put itself up for sale, but SPX abandoned the plan inDecember after its shareholders questioned the logic of amerger, sources have said.
Activist investor ValueAct, Garden Denver's third-largestshareholder and an early proponent of a sale, came out insupport of KKR's initial $75 offer. The investor reported aroughly 5 percent stake in the company in July.
Another top 10 shareholder, who requested anonymity, toldReuters on Friday that it was fine with the current offer.
But some analysts questioned if Gardner Denver is gettingthe best possible price.
Robert W. Baird analyst Michael Halloran said the companywas worth more than $80 per share and that the $76 valuation isbelow Gardner Denver's peer group multiples.
KKR and Gardner Denver said they expected the deal to closein the third quarter of 2013.
The deal will be financed by UBS, Barclays, Citigroup, Deutsche Bank, RBC CapitalMarkets, Mizuho and KKR Capital Markets.
Goldman Sachs advised Gardner Denver while UBSSecurities and Simmons & Co International served as financialadvisers to KKR.
