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Standard Motor Products SMP recently announced the acquisition of 100% capital stock of Trumpet Holdings, commonly referred as Trombetta. The transaction is worth $108 million and is subject to certain adjustments after completion.Standard Motor will fund the buyout through cash borrowings under its revolving credit facility. It is projected that the deal will boost the company’s earnings in 2021.
Trombetta is a pioneer in supplying power switching and power management products for mobile applications to original equipment (OE) customers across multiple markets. Trombetta has manufacturing facilities located in Milwaukee, Sheboygan Falls and Tijuana as well as a majority ownership in a joint venture in Wuxi, China.
Trombetta’s product portfolio spans from renowned electromechanical parts such as contactors and voltage regulators to innovative electronic components that include various electronic controls and CAN bus-enabled devices.
Long Island City, NY-based Standard Motorwas founded in 1919 and is one of the leading manufacturers, distributors and marketers of premium automotive replacement parts for engine management as well as temperature control systems. It primarily focuses on heavy-duty industrial and the OE market.
The company’s Pollak business buyout has enhanced its growth opportunities in OE, heavy duty and commercial vehicle markets, aftermarket distribution, product managementand service areas. Moreover, the company enjoys a strong competitive advantage courtesy of brand recognition and sizeable customer base.
Standard Motor is very optimistic about the latest deal as Trombetta has a proven track record of supplying superior quality products to well-established OE customers across various markets like heavy truck, construction, agriculture, electric vehicle and power sports. Moreover, the acquisition fits perfectly with the company’s strategy and vision to enhance its product offering beyond its core aftermarket business into other related markets. In fact, the buyout complements Standard Motor’s Pollak acquisition.
Through the buyout, Standard Motor anticipates usingTrombetta’s expertise and enhanced capabilities to its advantage. Importantly, the deal widens Standard Motor’s global manufacturing footprint, providing the company with expert engineering talent, a powerful sales organization and an efficient leadership team.
Importantly, few of Trombetta’s products are powertrain-related and are immune to the transition from internal combustion engines. These technologies can be successfully be leveraged in Standard Motor’s aftermarket business in the future. Moreover, the combination of Trombetta with Standard Motor’s current business is anticipated to fuel the latter’s growth.
In March, Standard Motor had acquired certain assets and liabilities of the particulate matter sensor business of Stoneridge Inc. The buyout of the particulate matter sensor product line from Stoneridge provides Standard Motor access to advanced emissions control technology used in commercial vehicles.
Standard Motor, peers of which include Dorman Products DORM, Genuine Parts Company GPC and LKQ Corporation LKQ, currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of the company have appreciated 13.8% year to date compared with the industry’s growth of 26.5%.
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