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ASSA ABLOY's Biosite Buyout to Aid Global Solutions Business

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ASSA ABLOY AB ASAZY announced that it acquired Solihull, U.K.-based Biosite Systems. The financial details of the transaction have been kept under wraps.

It is worth mentioning here that the company’s American Depository Receipts (ADRs) gained 1.8% yesterday, ending the trading session at $12.07.

Details of Buyout

Biosite is known for its biometric access control solutions for customers in the construction industry. Also, it provides solutions related to workforce management. The firm was founded in 2010 and employees 140 people. In 2019, Biosite generated revenues of SEK 175 million.

ASSA ABLOY anticipates that the Biosite buyout will be beneficial for Global Technologies’ business arm, Global Solutions. Notably, organic sales for Global Technologies increased 2% year over year in the fourth quarter of 2019.

Despite the top-line benefits, the acquired assets are predicted to dilute earnings from the beginning.
Strengthening Portfolio Through Buyouts

We believe that the above-mentioned transaction is consistent with ASSA ABLOY’s policy of acquiring businesses to gain access to new customers, regions and product lines. In 2019, acquisitions/divestments had a positive impact of 3% on sales growth. A few acquisition transactions have been discussed briefly below.

In November 2019, the company signed an agreement to acquire AM Group. Based in Australia, AM Group primarily manufactures products and offers services for customers in building construction and transportation industries.

Subject to the fulfillment of customary closing conditions and receipt of regulatory approvals, the transaction is predicted to be completed in first-quarter 2020.

Also, in the fourth quarter of 2019, ASSA ABLOY acquired LUX-IDent. Based in Lanskroun, Czech Republic, LUX-IDent is primarily engaged in manufacturing and marketing transponders. In September 2019, ASSA ABLOY acquired Australia-based Placard — a manufacturer of secure cards.

Zacks Rank, Earnings Estimates and Price Performance

ASSA ABLOY, with a market capitalization of $26.4 billion, currently carries a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for the company’s earnings is pegged at 53 cents per share for 2020 and 56 cents for 2021, suggesting no change and a decrease of 1.8% from the respective 60-day-ago figures.

The ADRs of ASSA ABLOY have gained 4% against the industry’s decline of 1.6% in the past three months.

Stocks to Consider

Some better-ranked stocks in the industry are Holdings, Inc. ALRM, Intellicheck, Inc. IDN and Johnson Controls International plc (JCI - Free Report) . While currently sports a Zacks Rank #1 (Strong Buy), both Intellicheck and Johnson Controls carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Current-year earnings estimates for Intellicheck and Johnson Controls have moved north over the past 60 days, while the same for was stable. Further, the trailing four-quarter positive earnings surprises for Intellicheck, Johnson Controls and are 4.76%, 16.93% and 4.43% each, on average.

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