Barnes Group (B) To Buy FOBOHA, Augment Molds Business

Machinery company, Barnes Group Inc. (NYSE:B) recently announced that it has entered into a definitive agreement to acquire Adval Tech’s molds business for approximately $136 million. The company expects to close the transaction in third-quarter 2016, which is subject to customary closing conditions and approvals.

As revealed, Adval Tech’s molds business primarily develops, manufactures and supplies complex plastic injection molds for use in the packaging, medical, consumer, and automotive end-markets. The segment markets its products under Adval Tech FOBOHA brand.

Barnes Group anticipates that the acquisition will compliment its molding solutions business by allowing easy penetration into the plastic injection molding market. It will be integrated in its Industrial segment post buyout. The company plans to fund the transaction with its existing cash resources as well as borrowing under its revolving credit facility.

The company’s share price has risen roughly 0.61% since the announcement of the transaction on Jul 12.

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We believe such inorganic ways of strengthening its business will allow Barnes Group to offer better and innovative products to customers in various operating regions. A diverse portfolio and product mix, along with new business wins, should help the company deliver solid results in the quarters ahead. Currently, the Zacks Consensus Estimate for the stock is at $2.49 per share for 2016 and $2.63 for 2017, reflecting year-over-year growth of 2.3% and 3.1%, respectively.

With a market capitalization of $2 billion, Barnes Group presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Middleby Corp. (NASDAQ:MIDD) , Nordson Corporation (NASDAQ:NDSN) and Altra Industrial Motion Corp. (NASDAQ:AIMC) . While both Middleby Corp. and Nordson sport a Zacks Rank #1 (Strong Buy), Altra Industrial Motion carries a Zacks Rank #2 (Buy).