Allegion (ALLE) To Buy Qatar Metal, Expand In Middle East
Zacks Investment Research | Nov 27, 2017 08:47PM ET
In order to accelerate growth in the fast growing EMEIA (Europe, Middle East, India and Africa) region, Allegion plc (NYSE:ALLE) will be acquiring one of Middle East’s largest manufacturers of commercial steel and wood doors and frames, Qatar Metal Industries. The transaction is expected to close in the first quarter of 2018.
Buyout Benefits
Qatar Metal, whose products are closely associated with Allegion’s core business and specification capabilities, will operate in Allegion’s EMEIA region. The company’s products will be offered as part of Allegion’s full-door solution for end users, specifiers and customers in the Middle East. Notably, Qatar Metal generated approximately $24 million in net sales for the 12 months ended Sep 30, 2017.
With the addition of Qatar Metal, Allegion will be able to expand its code-compliant products to include doors in the Middle Eastern market.
Inorganic Drive Strong
Acquisitions are an important part of Allegion’s growth strategy. The security products industry is highly fragmented, particularly in the developing markets, and involves the use of emerging technology products that employ newer technologies. This creates numerous opportunities to broaden the product portfolio as well as geographic footprint and enhance the position in strategic market segments through buyouts. During the first nine months of 2017, acquisitions accounted for 1.6% of the 7% revenue growth.
In January 2017, Allegion acquired McKenzie-based Republic Doors & Frames, Inc. through one of its subsidiaries. This buyout is expected to expand Allegion’s product line, improve operating efficiency and expand its distribution footprint. In June 2016, Allegion acquired Germany-based safety and security provider, Trelock GmbH and related companies. The company is focused on growing its portfolio through acquisitions in the near term.
Stock Price Movement
Allegion’s shares have gained 29.8% year to date, outperforming the 0.7% growth of its Original post
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