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Griffon (GFF) Gets Antitrust Clearance for Hunter Fan Buyout

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Griffon Corporation (GFF - Free Report) yesterday announced that it moved closer to completing its pending acquisition of Memphis, TN-based Hunter Fan Company after receiving antitrust clearance. The company agreed to the transaction on Dec 20, 2021.

Yesterday, shares of Griffon declined 0.46%, ending the trading session at $26.16. It has a market capitalization of $1.5 billion and currently carries a Zacks Rank #5 (Strong Sell).

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

Important Events Related to the Acquisition

Griffon announced the expiration of the waiting period per the Hart-Scott-Rodino (“HSR”) Antitrust Improvements Act of 1976. It be now close the acquisition in the week of Jan 24, 2022.

On Jan 10, Griffon addressed its shareholders via a letter, citing the importance of the Hunter Fan acquisition. It noted that the assets to be acquired would be strategic fits for it and complement its existing fan businesses. Well-known brands offered by Griffon include True Temper, AMES and ClosetMaid. Also, Hunter Fan’s solid product offerings, innovation capabilities, experienced workforce, healthy e-commerce businesses, and strong customer base will be advantageous.

One of the important customers of Hunter Fan is the largest home improvement specialty retailer globally, The Home Depot Inc. (HD - Free Report) . Exiting third-quarter fiscal 2021 (ended October 2021), it had 2,317 retail stores.

Home Depot currently sports a Zacks Rank #1 (Strong Buy) and has a market capitalization of $407 billion. In the past 60 days, Home Depot’s earnings estimates have been raisedby 5.9% for fiscal 2021 (ending January 2022) and 7.5% for fiscal 2022 (ending January 2023).

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).

Last December, Griffon noted that the Hunter Fan acquisition would be executed by its subsidiary, The AMES Companies, Inc. The seller in the transaction is MidOcean Partners. The deal value was fixed at $845 million and will be funded through Griffon’s term-loan facility, available cash and revolving credit facility. The value of $845 million mirrors the 9.4XEBITDA of the first full year of the transactioncompletion.

Price Performance and Estimate Trend

In the past three months, Griffon's shares have gained 0.7% against the industry's decline of 5.2%.


Zacks Investment ResearchImage Source: Zacks Investment Research


The Zacks Consensus Estimate for the company's earnings per share is pegged at $1.71 for fiscal 2022 and $2.03 for fiscal 2023, reflecting declines of 20.1% and 23.4% from the respective 60-day-ago figures. The consensus estimate for the first quarter of fiscal 2022 (ended December 2021, results are awaited) of 13 cents has declined 76.8% over the past 60 days.

Griffon Corporation Price and Consensus


Griffon Corporation Price and Consensus

Griffon Corporation price-consensus-chart | Griffon Corporation Quote

Stocks to Consider

Two better-ranked stocks in the industry are discussed below.

Danaher Corporation (DHR - Free Report) 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. DHR presently carries a Zacks Rank #2 (Buy).

You can see the complete list of today's Zacks #1 Rank stocks here.

Danaher’s shares have lost 3.1% in the past three months. The Zacks Consensus Estimate for DHR’s earnings has increased 0.6% for 2021 (results are awaited) and 1.9% for 2022 in the past 60 days.

Carlisle Companies Incorporated (CSL - Free Report) acquired California-based Henry Company in September 2021. CSL presently carries a Zacks Rank #2.

Shares of Carlisle have gained 11.2% in the past three months. The Zacks Consensus Estimate for CSL’s earnings has been unchanged for 2021 (results are awaited) and has risen 1.2% for 2022 in the past 60 days.

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