Compass Diversified Shares Slightly Gain on Clear Earth Deal - Analyst Blog

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Compass Diversified Holdings ( CODI ) recently entered into an agreement to acquire Clean Earth Holdings Inc for $243 million. Expected to close by the end of this month, the announcement seemed to cheer investors' sentiment leading to a marginal increase in share price to $17.55 as on Friday.

Clean Earth Holdings is a leading provider of essential and cost-effective land-fill avoidance solutions. This deal will likely strengthen Compass Diversified's position in the market and unlock additional values by generating incremental revenue stream.

Post acquisition, Compass Diversified is likely to retain Clean Earth's experienced management team and utilise its strong cash flow and attractive growth potential. Clean Earth has a strong environmental and safety track record with a premier reputation in the specialty waste industry. Upon closure, Compass Diversified intends to leverage its market leadership and scalable infrastructure to gain additional mileage.

Compass Diversified aims to strategically expand through both organic and inorganic growth. The acquisition takes the total number of businesses owned by the company to eight, apart from a 41% ownership interest in Fox Factory Holding Corp. ( FOXF ). CODI expects Clean Earth to contribute approximately 28-32 cents per share to its cash flow accretion on a yearly basis.

Compass Diversified is a leading owner of well-known North American middle market businesses with each of its current subsidiaries being leaders in  the niche market.

Compass Diversified currently holds a Zacks Rank #2 (Buy). Other stocks that look promising and are worth a look include Federal Signal Corp. ( FSS ) and ITT Corp. ( ITT ), both carrying a Zacks Rank #2 (Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CODI , ITT , FSS , FOXF

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