Briggs & Stratton Corporation
) recently announced that it has entered into an agreement to
acquire Brazil-based Companhia Caetano Branco for approximately
Founded in 1936, Branco is one of the leading brands in the
light power equipment market in Brazil with a wide range of
outdoor power equipment used mainly in light commercial
applications. Its products include generators, water pumps, and
light construction equipment. Branco generates annual sales to
the tune of around $40 million with operating margins of 13% to
The transaction, pursuant to customary closing conditions, is
expected to be completed in the next three to four months. The
acquisition will be funded from available cash on hand or Briggs'
existing credit facilities. As of September 30, 2012, Briggs
& Stratton had $101.6 million cash in hand on its balance
sheet. The company also has $500 million available under its
revolving credit facility.
The acquisition is in sync with Briggs' strategy of expanding
in the emerging nations with a focus on extending its product
portfolio in higher margin categories and to diversify
diversifying its geographic footprint. Post acquisition, Briggs
will benefit from Branco's brand strength, strong operational
performance, and strong distribution network and customer base in
Brazil is a strategic fit for expansion given its
infrastructure requirements and high growth opportunities.
Brazil's economy has been steady over the last decade. However,
the momentum dipped last year and the government forecasts growth
this year at 2.5%. Brazil estimates a spending of $110 billion
annually over the next five years to meet its infrastructure
Brazil's recent $66 billion stimulus package, aimed at
reviving the country's ailing road and railway systems and to
help bolster the economy, provides significant growth
opportunities. Brazil's construction requirements have been on
the rise based on the infrastructure needs for hosting the 2014
FIFA World Cup and the 2016 Olympic Games in Rio de Janeiro.
Based in Milwaukee, Wisconsin, Briggs & Stratton is the
world's largest producer of gasoline engines for outdoor power
equipment. Its wholly owned subsidiary, Briggs & Stratton
Power Products Group LLC, is North America's number one
manufacturer of portable generators and pressure washers, and is
a leading designer, manufacturer and marketer of standby
generators, along with lawn, garden and turf care products
through its popular brands. The company competes with
Honda Motor Co., Ltd.
Kawasaki Heavy Industries, Ltd.
Deere & Company
). Briggs & Stratton currently retains a short-term Zacks #3
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