Thermon Group To Buy CCI Thermal, Expects Benefits In FY19
Zacks Investment Research | Oct 05, 2017 08:50AM ET
Thermon Group Holdings, Inc. (NYSE:THR) recently agreed to acquire 100% equity stake in CCI Thermal Technologies Inc. (CCI Thermal). In addition, the buyout will add some related real estate assets to the company’s portfolio. Buyout consideration has been fixed at CAD$258 million.
CCI Thermal manufactures engineered heating and filtration solutions for use in the energy, petrochemical, electrical distribution, power, transit and industrial end markets. Prime North American brands include Cata-Dyne, Ruffneck, Norseman, Caloritech, 3L Filters and Fastrax. It has five facilities for manufacturing and fabrication in Canada and the United States, providing employment to nearly 375 people. Notably, CCI Thermal generated revenues of CAD$ 95 million in the fiscal year ended Jul 31, 2017.
Details of the Buyout
Complying with the terms of the buyout agreement, Thermon Group’s subsidiary, especially formed for this deal, will acquire CCI Thermal and its related assets. The transaction has received a go-ahead from the board of directors of both the companies. Also, it does not require any regulatory approvals.
The buyout consideration will be financed with available cash and a new senior secured debt facility. Upon completion, Thermon Group’s net leverage is expected to be approximately 3.4x. Also, the company will incur acquisition-related costs of $5.5 million in fiscal 2018 (ending Mar 31, 2018).
Thermon Group anticipates closing the acquisition in the third quarter of fiscal 2018 (ending December 2017).
Synergistic Benefits From CCI Thermal Buyout
Post the completion of the CCI Thermal buyout, Thermon Group will become a leader in industrial process heating platform, with addressable market worth $2.3 billion. The company will have enhanced engineering and technological capabilities to leverage benefits from future growth opportunities.
Thermon Group anticipates realizing annualized run-rate cost synergies of CAD$2.4 million in fiscal 2019. Also, the acquired assets are anticipated to boost operating margins, free cash flow and GAAP earnings per share in fiscal 2019.
In the last month, Thermon Group’s shares have yielded 22.9% return, outperforming 10.6% gain of the Original post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.