Lord Corporation sold for $3.7 billion

Parker-Hannifin to acquire LORD Corporation for $3.7B in cash

Parker Hannifin to buy Lord Corp., Stockwinners

Parker Hannifin (PH) announced that it has entered into a definitive agreement to acquire LORD Corporation for approximately $3.675B in cash.

The transaction has been approved by the Board of Directors of each company and is subject to customary closing conditions, including receipt of applicable regulatory approvals.

LORD, headquartered in Cary, North Carolina, is a privately-held company founded in 1924 offering a broad array of advanced adhesives, coatings and specialty materials as well as vibration and motion control technologies.

Lord Corp. sold for $3.7 billion in cash, Stockwinners

LORD’s products are used in the aerospace, automotive and industrial markets. LORD has annual sales of approximately $1.1B and employs 3,100 team members across 17 manufacturing and 15 research and development facilities globally.

“This strategic transaction will reinforce our stated objective to invest in attractive margin, growth businesses, such as engineered materials, that accelerate us towards top-quartile financial performance,” said Tom Williams, Chairman and CEO of Parker.

“LORD will significantly expand our materials science capabilities with complementary products, better positioning us to serve customers in growth industries and capitalize on emerging trends such as electrification and lightweighting.

Upon closing of the transaction, LORD will be combined with Parker’s Engineered Materials Group.

Parker plans to finance the transaction using new debt.

Following the completion of the transaction, Parker expects to maintain a high investment grade credit profile.

The transaction is not expected to impact Parker’s dividend payout target averaging approximately 30-35% of net income over a five-year period, while maintaining its record of annual dividend increases.

The transaction is expected to be completed within the next four to six months and is subject to customary closing conditions, including receipt of applicable regulatory approvals.

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Newell Brands tumbles on outlook

Newell Brands announces resignation of three directors from board

Newell Brands exploring portfolio reconfiguration to simplify operations

Newell Brands tumbles on outlook, Stockwinners.com
Newell Brands tumbles on outlook

Newell Brands (NWL) announced preliminary estimated results for 2017.

The company currently anticipates core sales growth of approximately 0.8%, down from previous guidance 1.5% to 2.0%, and normalized EPS in the range of $2.72-$2.76, down from previous guidance $2.80-$2.85.

Sees approximately $1B of operating cash flow generated in the fourth quarter of 2017, resulting in full year operating cash flow of approximately $930M, versus previous guidance of $700M-$800M.

The company’s core sales results were impacted by an acceleration of the gap between sell-in and sell-through results due to a continuation of retailer inventory rebalancing in the U.S. and the bankruptcy of a leading baby retailer.

Margins were impacted by the negative mix effect of lower Writing sales and a reduction of fixed cost absorption due to shorter cycle runs on self-manufactured products, designed to reduce inventories and maximize operating cash flow.

Newell Brands CEO says majority of brands performing well despite difficult 2H17

“We believe that exiting non-strategic assets, reducing complexity and focusing on our key consumer-focused brands will make us more effective at unlocking value and responding to the fast-changing retail environment,” said Michael Polk, Newell Brands CEO.

“Despite a very difficult commercial outcome in the second half of 2017, the vast majority of our brands are performing well in the marketplace.

Our e-commerce business grew at a strong double-digit pace, our market shares have continued to increase and sell-through growth has accelerated with Q4 2017 growth rates ahead of Q3 2017 in the U.S., which strengthens our confidence in our brand, design and innovation-led strategy.

Importantly, our early efforts to improve working capital metrics look to have yielded good results with operating cash flow of nearly $1 billion dollars in Q4, despite the increased margin pressure from planned downtime in our factories and input cost inflation. We are committed to achieving our transformation objectives and are taking decisive action with speed to adapt our agenda to the unprecedented volatility in our retailer landscape,” Polk added.

PORTFOLIO CHANGES

Newell Brands announced that it will explore a series of strategic initiatives to accelerate its transformation plan, improve operational performance and enhance shareholder value.

Key components include: Focusing Newell’s portfolio on nine core consumer divisions with approximately $11B in net sales and $2B of EBITDA;

Exploring strategic options for industrial and commercial product assets, including Waddington, Process Solutions, Rubbermaid Commercial Products and Mapa;

Exploring strategic options for the smaller consumer businesses, including Rawlings, Goody, Rubbermaid Outdoor, Closet, Refuse and Garage, and U.S. Playing Cards;

Newell Brands exploring portfolio reconfiguration to simplify operations. Stockwinners.com
Newell Brands exploring portfolio reconfiguration

 

Execution of these strategic options would result in a significant reduction in operational complexity through a 50% reduction in the company’s global factory and warehouse footprint, a 50% reduction in its customer base and the consolidation of 80% of global sales on two ERP platforms by end of 2019.

If fully actioned, Newell Brands would expect to be an approximately $11B focused portfolio of leading consumer-facing brands with attractive margins and growth potential in global categories. These brands would leverage the company’s advantaged capabilities in brands, innovation, design and e-commerce.

The company expects proceeds after tax to be greater than that required to achieve a leverage ratio below the lower end of its current leverage ratio target range.

Newell Brands intends to begin the evaluation process immediately and expects any resulting transactions to be completed by the end of 2019.

DOWNGRADES

Barclays analyst Lauren #Lieberman downgraded Newell Brands to Equal Weight from Overweight and cut her price target for the shares to $26 from $35.

“Put simply, we’ve lost confidence,” the analyst says following this morning’s preannounced Q4, announced strategic overhaul and departure of certain board members.

Lieberman has concerns given the scale of Newell’s transformation expected in 2018. She also sees a lack of visibility around cash flow.

SunTrust said Newell reset the bar with a number of announcements today announcing Q4 results, below consensus 2018 guidance, a new strategic initiative to simplify its portfolio, and BOD changes.

The firm’s analyst actually views today’s announcements as a positive and said the news makes shares even more investable for 2018.

NWL is down 22% to $24.20.


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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.