ESCO Technologies shares are down as investors reprice the company following its agreement to acquire Megger Group Limited in a transaction valued at about $2.35 billion. The structure combines a large equity component with new debt needs, which can pressure the stock on concerns about dilution, leverage, and integration risk even when the strategic rationale is viewed positively.

The definitive agreement calls for total consideration of approximately $2.35 billion, comprised of roughly $0.9 billion in cash and ESCO equity valued at about $1.4 billion, including an issuance of about 5.10 million ESCO shares (subject to customary adjustments). The company also outlined acquisition-related risks around regulatory approvals, financing, and the ability to integrate Megger and achieve expected benefits, which typically increases uncertainty premiums immediately after announcement.

Large, transformational acquisitions often create a short-term “math check” for shareholders: the share issuance can be dilutive, while the cash component implies incremental borrowing and higher interest expense. With ESCO’s stock up sharply into the announcement window, today’s pullback looks like a reset as traders lock in gains and longer-term holders weigh whether Megger’s growth profile and cross-selling potential can offset the near-term balance-sheet and execution overhang.