Griffon Corporation ( GFF Quick Quote 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 Quick Quote 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%.
Image 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.