ESAB Corporation spent the second quarter of 2026 closing the largest deal in its four-year history as a standalone public company. On June 1, 2026 the welding and cutting equipment and consumables maker completed the acquisition of Eddyfi Holding Inc., a Quebec-based maker of advanced inspection and monitoring technologies, for roughly $1.5 billion, funded with $1 billion of new senior notes due 2031, a bridge loan, a $175 million mandatory convertible preferred issuance, and a $143 million common stock placement. The deal landed in the same quarter that organic demand turned soft, GAAP net income nearly halved under the weight of acquisition charges and higher interest costs, and adjusted EBITDA margins compressed by roughly 140 basis points. The market has delivered its verdict on the combination: at $79.25, the stock trades within touching distance of its 52-week low of $77.34 and roughly 42% below its 52-week high of $137.42, valuing the company at $4.92 billion.
What changed, in plain terms, is the shape of the business. ESAB remains, at its core, a maker of arc welding equipment (the machines and power sources that join metal with an electric arc) and welding consumables (the filler wire, electrodes, and fluxes that get used up in the process and must be repurchased), plus plasma and oxy-fuel cutting systems. That franchise generated $807.6 million of second-quarter revenue, up 12.9% year over year, but only 2.5% of that growth came from existing operations; 7.8 points came from acquisitions and 2.6 points from currency. Underneath the headline growth, pricing added $23.9 million across the first half while volumes fell $18.6 million, pressured by tariffs in the Americas, disruption tied to the war in Iran, and lower sales in Russia.
The strongest argument for owning the stock here is one of price against fundamentals. On trailing numbers the shares look unexciting at 25.5 times trailing earnings, but the forward multiple of 12.1 times implies the market is already modeling a meaningful recovery in profitability once Eddyfi contributes a full half year, acquisition charges roll off, and restructuring savings land. Adjusted EBITDA, the cash-earnings proxy management uses, still grew $7.9 million year over year in the quarter to $151.4 million even with the EMEA & APAC segment's margin slipping from 20.0% to 17.8%. ESAB also retains a consumables-heavy revenue mix that behaves more like an industrial annuity than a capital-equipment business, and a $690 million undrawn revolver that leaves room to digest the deal.
The counterargument is equally straightforward. This is now a leveraged roll-up story into a soft industrial demand backdrop: gross debt has roughly doubled to finance a business bought at approximately six times its $240 million of revenue, the weighted average borrowing cost sits at 5.39%, and the equity was diluted twice in February to fund the transaction. GAAP net income fell to $36.4 million from $69.8 million a year ago, the effective tax rate jumped to 24.3% from 20.8%, and the company carries legacy asbestos liabilities and a Russia business that still generated $41.4 million of second-quarter revenue under an active sanctions regime. The filing contains no quantitative guidance to anchor the recovery case.
The variables that decide this one are whether Eddyfi integrates without margin slippage, whether organic volume inflects positive once tariff and Middle East comparisons ease, and whether free cash flow rebuilds quickly enough to start deleveraging. If the answer to all three is yes, a low-teens forward multiple on a high-teens EBITDA-margin industrial with a growing inspection annuity looks cheap. If any of them stalls, the balance sheet does the worrying for you.