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Ingersoll (IR) on Buyout Spree, To Acquire Maximus for Cash

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Ingersoll Rand Inc. IR yesterday announced that it agreed to acquire Montreal, Canada-based Maximus. The transaction value has been fixed at CAD$135.4 million in cash. This is Ingersoll’s third buyout announcement from the start of 2021. The buyout is expected to be a strategic fit for the company’s existing businesses.

Maximus specializes in providing digital controllers, which connect all farm devices and help in simplifying facility management. Also, it provides Industrial Internet of Things (IIoT) technology. Both controllers and IIoT offered are used in the agritech market.

Annual revenues of Maximus are CAD$40 million. Its top line is anticipated to increase in double-digits in the coming 5 years.

Inside the Headlines

As noted, the buyout of Maximus will strengthen Ingersoll’s product portfolio, enhance its technical and digital capabilities, and boost its presence in rural water treatment and industrial markets. Notably, Maximus will add more value to Ingersoll’s Dosatron smart dosing pump system as well as its employee base of 100 people will likely prove to be a boon for Ingersoll.

The acquired assets, upon completion, will form part of Ingersoll’s Precision and Science Technologies (“PST”) segment. The Maximus buyout is anticipated to prove beneficial to PST’s ARO and Milton Roy brands. Also, the company believes that Maximus’ adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margin will be in line with the PST segment’s current level in 2021.

The PST segment manufactures products like metering pumps (for use in multiple industries) and liquid and gas pumps for use in life sciences, lab and medical markets. Key brands are Hartell, Welch, ARO, Dosatron and others. In first-quarter 2021, the segment generated revenues of $215.7 million, reflecting growth of 12.2% from the year-ago quarter. Also, the top line represented 15.7% of the company’s total revenues in the said quarter.

Upon the receipt of required regulatory approvals, Ingersoll anticipates completing the buyout in the third quarter of 2021.

Ingersoll’s Other Buyout Activities

The company believes in the expansion of product lines, strengthening footholds in existing and new markets, and expanding customer base through acquisitions. In the first quarter of 2021, acquisitions had a positive impact of 1.4% on the company’s sales. For 2021, it anticipates acquired assets to boost its sales by $60 million.

In addition to the Maximus buyout announcement, Ingersoll agreed to purchase Germany-based Seepex GmbH in June. The cash transaction was valued at €431.5 million. Seepex will be integrated with Ingersoll’s PST segment, upon the completion of the buyout in the third quarter of 2021.

In February 2021, Ingersoll acquired Tuthill Vacuum and Blower Systems, and integrated it with its Industrial Technologies and Services segment. Also, it acquired Albin Pump SAS — a manufacturer of electric peristaltic pumps based in France — in September 2020. The buyout was added to Ingersoll’s PST segment.

Zacks Rank, Price Performance and Estimate Trend

With a market capitalization of $20.5 billion, Ingersoll currently carries a Zacks Rank #3 (Hold). High costs, huge debts and exposure to international markets are concerning for the company. However, buyout activities and focus on innovation are expected to help.

In the past three months, the company’s stock has declined 2.1% against the industry’s growth of 4.7%.

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Zacks Investment Research

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The Zacks Consensus Estimate for Ingersoll’s earnings is pegged at $1.71 for 2021 and $1.99 for 2022, reflecting declines of 5.5% and 2.9% from the 60-day-ago figures. Also, the consensus estimate for second-quarter 2021 earnings at 39 cents reflects a decrease of 9.3% from the 60-day-ago figure of 45 cents.

Ingersoll Rand Inc. Price and Consensus

Ingersoll Rand Inc. Price and Consensus
Ingersoll Rand Inc. Price and Consensus

Ingersoll Rand Inc. price-consensus-chart | Ingersoll Rand Inc. Quote

Industry Players Engaged in Buyouts YTD

Helios Technologies, Inc. HLIO, belonging to the same industry, has engaged in buyouts activities year to date. It agreed to purchase Italy-based NEM S.r.l. in June 2021, with completion anticipated in third-quarter 2021. Also, it agreed to buy the electronic control systems and parts business of Shenzhen Joyonway Electronics & Technology Co., Ltd. in May (to be accomplished in third-quarter 2021). Helios acquired assets of the engineering solution provider, BJN Technologies, LLC in January 2021. The company presently carries a Zacks Rank #2 (Buy).

Likewise, Applied Industrial Technologies, Inc. AIT and IDEX Corporation IEX have been making acquisitions since the beginning of 2021. In January 2021, Applied Industrial acquired Gibson Engineering Company, Inc., and IDEX acquired Airtech Group, Inc. along with the US Valve Corporation and other entities in June 2021. Also, IDEX bought Abel Pumps, L.P. along with its affiliates in March. Notably, Applied Industrial presently sports a Zacks Rank #1 (Strong Buy) and IDEX carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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