Carlisle Companies Incorporated CSL yesterday announced that it agreed to purchase California-based Henry Company for $1.575 billion in cash. The other party to the transaction was affiliates of the United States-based private equity firm American Securities LLC.
Carlisle’s shares ended yesterday’s trading session at $191.33, reflecting a decline of 1.2% from the previous day.
Henry specializes in providing building envelope systems, which effectively help control energy, vapor, water and airflow in a building. Its customers belong to the repair, restoration and construction segment of commercial, residential and light commercial markets.
For 12 months ended May 2021, the firm’s revenues totaled $511 million and its adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $119 million.
Inside the Headlines
The buyout of Henry will strengthen Carlisle’s offerings for repair and restoration works as well as construction activities. Growth opportunities are expected to increase in North America’s residential and commercial construction markets.
Upon the completion of the transaction, Henry will be integrated with the Carlisle Construction Materials segment. The segment makes and provides roofing and waterproofing products for commercial and industrial buildings. The segment revenues accounted for 69.9% of Carlisle’s revenues generated in the first quarter of 2021.
Subject to the fulfillment of customary closing conditions, the company anticipates closing the buyout in third-quarter 2021.
Carlisle anticipates revenue synergies from the cross-selling of products. Cost synergies (pre-tax) of $30 million are predicted by 2025 from the Henry buyout. The company expects the acquisition to boost its earnings by $1.25 per share in 2022. Accretion to growth and EBITDA margin outlook is expected immediately.
Acquiring businesses are effective ways for Carlisle to gain access to new markets, expand its product line and enhance the customer base. Apart from this, the company’s above-mentioned buyout transaction is in sync with its Vision 2025 and contributes to achieving earnings of $15.00 per share.
Zacks Rank, Estimate Trend and Price Performance
With a $10.10-billion market capitalization, Carlisle currently carries a Zacks Rank #4 (Sell). The company faces headwinds from the weak commercial aerospace business, high debts and woes related to international operations. The strengthening infrastructure market in the United States and buyouts/divestment activities are likely to aid the company in the quarters ahead.
In the past three months, shares of Carlisle have rallied 6.8% compared with the industry’s growth of 3.7%.
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The Zacks Consensus Estimate for earnings is pegged at $8.69 for 2021 and $10.34 for 2022, suggesting a decline of 4.5% and 0.7% from the 60-day-ago figures.
Carlisle Companies Incorporated Price and Consensus
Carlisle Companies Incorporated price-consensus-chart | Carlisle Companies Incorporated Quote
Industry Players With Buyout Activities
Three companies from the same industry that engage in acquisitive actions are Danaher Corporation DHR, General Electric Company GE and Griffon Corporation GFF. Danaher currently carries a Zacks Rank #3 (Hold), General Electric has a Zacks Rank #4 and Griffon carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In June 2021, Danaher agreed to acquire Fargo, ND-based Aldevron in a $9.6-billion transaction. The company’s Cytiva acquired Canada-based Vanrx Pharmasystems and IDT bought Swift Biosciences in first-quarter 2021.
In June, General Electric, through its joint venture’s subsidiary (GE-Prolec Transformers, Inc.), agreed to purchase the Transformer Solutions business of SPX Corporation. The company’s unit GE Healthcare acquired France-based Zionexa in May.
In January, Griffon’s subsidiary, The AMES Companies, Inc., added Quatro Design Pty Ltd to its portfolio.
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