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Deutsche Bank Sees Positive Takeaways From Eagle Ottawa Acquisition For Lear

In a report published Thursday, Deutsche Bank analyst Rod Lache reiterated a Hold rating and $103.00 price target on Lear (NYSE: LEA).

In the report, Deutsche Bank noted, “Lear officially announced an agreement to acquire of Eagle Ottawa, the world's largest manufacturer of Automotive leather, for approximately $850MM. The details appear slightly better than suggested in media reports last week. Eagle Ottawa is expected to have 2015 revenue of ~$1bn and EBITDA of ~$140MM (based on the disclosed 6.0x pre-synergy purchase multiple). Adjusted for expected synergies of $22MM, we estimate the post synergy multiple at ~5.3x, approximately in-line with Lear's current EV/2015 EBITDAP multiple. The transaction is expected to close in Q1'15 and it will be financed through a combination of cash and debt. Lear expects the acquisition to be 5% accretive before synergies (we estimate post synergy accretion of ~7%).”

Lear closed on Wednesday at $98.11.

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