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EnPro Industries, Inc. NPO announced yesterday that it will acquire Santa Rosa, CA-based Alluxa, Inc. The transaction has been valued at $255 million.
Subject to the receipt of regulatory approvals and fulfillment of customary closing conditions, the buyout is anticipated to complete in fourth-quarter 2020.
EnPro’s share price has increased 3.8% on Sep 28, closing the trading session at $57.87.
Alluxa is engaged in providing thin-film coatings and specialized optical filters for use in semiconductor, industrial technology and life sciences markets. Geographically, it has operations in Asia, the Americas and Europe. Founded in 2007, Alluxa employs 76 people.
Details of the Buyout
As noted, EnPro anticipates that the Alluxa buyout will add vigor to its exiting offerings in the thin-film product category. It believes that Alluxa’s SIRRUS automated plasma deposition software as well as its presence across multiple end markets will be boons.
In addition to these, Alluxa’s solid customer base and geographical presence as well as an experienced management team will likely enhance EnPro’s growth opportunities. Another compelling factor is Alluxa’s solid track record of revenue growth. EnPro anticipates Alluxa’s revenues to continue increasing in double-digits annually, even post the completion of the buyout.
EnPro noted that it will finance the purchase price of the buyout with cash in hand and rollover equity from Alluxa executives.
EnPro’s Buyout Activities
We believe that the latest buyout is in line with EnPro’s policy of acquiring businesses in an attempt to gain access to new customers, regions and product lines.
In Sep 2019, Enpro acquired Taoyuan City, Taiwan-based LeanTeq Co., Ltd — provider of services, including verification, cleaning and testing to critical components as well as assemblies in semiconductor equipment. It integrated LeanTeq with the Technetics division of its Sealing Products segment.
In July 2019, EnPro acquired a privately held company — The Aseptic Group. The acquired assets were integrated with the Garlock division of EnPro’s Sealing Products segment. Garlock is mainly engaged in supplying fluid handling and sealing products to customers in the process industries.
Zacks Rank, Earnings Estimate and Price Trend
With a market capitalization of $1.1 billion, EnPro currently sports a Zacks Rank #1 (Strong Buy).
The Zacks Consensus Estimate for EnPro’s earnings is pegged at $1.79 for 2020 and $2.21 for 2021, reflecting growth of 44.4% and 13.3% from the respective 60-day-ago figures. Also, the estimate for the third quarter grew by 23.1% to 32 cents during the same timeframe.
EnPro Industries Price and Consensus
EnPro Industries price-consensus-chart | EnPro Industries Quote
In the past three months, EnPro’s shares have gained 17.4% against the industry’s growth of 11%.
Other Stocks to Consider
Some other top-ranked companies in the same industry are Tennant Company TNC, Altra Industrial Motion Corp. AIMC and Dover Corporation DOV. While Tennant sports a Zacks Rank #1, Altra Industrial and Dover carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for Tennant and Dover improved for the current year, while have remained stable for Altra Industrial. Further, earnings surprise for the last reported quarter was 380% for Tennant, 76.47% for Altra Industrial and 26.97% for Dover.
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