Griffon (GFF) Hunter Fan Buyout to Add Vigor to CPP Segment

Griffon (NYSE:GFF) Corporation GFF announced that it completed the acquisition of Memphis, TN-based Hunter Fan Company for $845 million. The company agreed to the transaction on Dec 20, 2021, and received antitrust clearances on Jan 13, 2022.

Notably, the buyout was executed by Griffon’s subsidiary, The AMES Companies, Inc. The seller in the transaction is MidOcean Partners.

Shares of Griffon increased 3.31% on Jan 24, ending the trading session on the day at $23.75.

Inside the Headlines

Hunter Fan is a leading manufacturer and supplier of residential ceiling fans as well as those suitable for industrial and commercial purposes. Its offerings include SureSpeed, SIMPLEconnect and WeatherMax fans. It also provides air purifiers, replacement filters, heaters, bath fans, humidifiers, standing fans and thermostats.

Griffon considers Hunter Fan to be a strategic fit and it expects the same to complement its existing fan businesses. Well-known brands offered by Griffon are True Temper, AMES and ClosetMaid. It also believes that Hunter Fan’s solid product offerings, experienced workforce, healthy e-commerce businesses, innovation capabilities, and strong customer base will be advantageous.

Griffon’s Consumer and Professional Products (CPP) segment now houses the operations of Hunter Fan. The CPP segment operates through AMES Companies and provides professional and consumer products related to landscaping, outdoor lifestyles, and home storage and organization. The segment’s revenues increased 8% year over year in fiscal 2021 (ended September 2021) and represented 54% of Griffon’s total revenues in the year.

Financial Impacts of Hunter Fan Buyout

For fiscal 2022 (ending September 2022), the Hunter Fan buyout is anticipated to immediately prove accretive to Griffon’s earnings and cash flow. The same is likely to boost Griffon’s revenues by $400 million, earnings before interest, tax, depreciation and amortization (“EBITDA”) by $90 million, and earnings by 50 cents per share in fiscal 2023 (ending September 2023).

The acquisition price of $845 million was funded through Griffon’s term-loan facility (contribution $800 million), available cash and revolving credit facility. The value of $845 million mirrors the 9.4XEBITDA of the first full year of the transaction completion.

Buyout Activities of Three Other Players

We have discussed the buyout activities of three other players in the industry to which Griffon belongs.

Danaher Corporation (NYSE:DHR) DHR acquired Canada-based Vanrx Pharmasystems in February 2021, while Swift Biosciences was added to its portfolio in first-quarter 2021. In August 2021, Danaher acquired Aldevron.

The company is slated to report fourth-quarter 2021 results on Jan 27, before market open. With earnings beat recorded on all occasions, Danaher’s earnings surprise for the last four quarters is 24.05%, on average.

Carlisle Companies (NYSE:CSL) Incorporated CSL (OTC:CSLLY) acquired California-based Henry Company in September 2021.

The company will release fourth-quarter results on Feb 10, after market close. Carlisle’s results were better than expected in the last four quarters, with an earnings surprise of 38.89%, on average.

Honeywell International Inc (NASDAQ:HON). HON acquired Tempe, AZ-based US Digital Designs in December 2021. It also added Performix in September and Sparta Systems in April.

The company is slated to report fourth-quarter 2021 results on Feb 3, before market open. Honeywell delivered better-than-expected results in the last four quarters, with an earnings beat of 3.70%, on average.

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