Machinery company, Barnes Group Inc. (NYSE:B) announced that it has completed the acquisition of Adval Tech’s molds business, except for the latter’s Chinese operations due to pending regulatory approvals. The company anticipates completing the purchase of the pending operations in fourth quarter 2016.
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 has financed the transaction, valued at approximately CHF 133 million, with its existing cash resources as well as borrowing under its revolving credit facility. The company will integrate the acquired assets with its Industrial segment’s Molding Solutions strategic business unit.
Barnes Group anticipates that the acquisition will compliment its molding solutions business by allowing easy penetration into the plastic injection molding market. FOBOHA has an annual sale generation capacity of $75 million.
The share price of Barnes Group has gained roughly 14.5% since the announcement of the acquisition deal on Jul 12.
We believe such inorganic ways of strengthening its business will allow Barnes Group to offer better and innovative products to customers. 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 pegged at $2.51 per share for 2016 and $2.64 for 2017, reflecting year-over-year growth of 5.6% and 5%, respectively.
Zacks Rank & Stocks to Consider
With a market capitalization of $2.2 billion, Barnes Group presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the machinery industry include DXP Enterprises, Inc. (NASDAQ:DXPE) , Tennant Company (NYSE:TNC) and Gorman-Rupp Co. (NYSE:GRC) . While DXP Enterprises and Tennant Company sport a Zacks Rank #1 (Strong Buy), Gorman-Rupp carries a Zacks Rank #2 (Buy).
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BARNES GRP (B): Free Stock Analysis Report
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