Home and security products manufacturer,
Fortune Brands Home and Security Inc.
) has successfully completed its previously announced acquisition
of a privately-owned producer of bathroom vanities and vanity
sink tops, WoodCrafters Home Products, for a total consideration
of $300 million.
FORTUNE BRD H&S (FBHS): Free Stock Analysis
HAVERTY FURNIT (HVT): Free Stock Analysis
KIRKLANDS INC (KIRK): Free Stock Analysis
RESTORATION HDW (RH): Free Stock Analysis
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Fortune Brands funded the acquisition using its cash on hand and
credit facilities. The company estimates the purchase price for
the acquisition to be equivalent to 7.5x annual EBITDA. However,
it expects the operating synergies from the acquisition to lower
the purchase multiple to 6.0x EBITDA over the next two years.
With the recovery in the cabinet markets, Fortune Brands believes
this acquisition will enhance its long established leadership
position in the kitchen and bath cabinets market. It expects
WoodCrafters' strength in manufacturing bathroom vanities and
sink tops to add to its assortments for the bathroom with
increased product varieties, better supply chain control and
capacity additions in the low-cost North American manufacturing
Based in Weslaco, Texas, WoodCrafters generates an annual sale of
$230 million and has operations spread out in southern Texas and
northern Mexico. Joining forces with Fortune Brands, WoodCrafters
is expected to function as a wing of MasterBrand Cabinets Inc.,
the company's kitchen & bath cabinetry unit. Fortune Brands
has plans in place to smoothly absorb WoodCrafters' 2,000
employees into the existing management team of MasterBrand
Further, the company expects the acquisition to be fully
accretive to its earnings per share in fiscal 2014, coming in the
range of 11 cents - 13 cents, excluding charges or gains and
operating synergies for the full year. However, the company's
recently outlined 2013 earnings per share guidance do not include
any impact from the transaction.
Based in Deerfield, Ill., Fortune Brands is a leading producer of
products and services focused on fulfilling aspirations of
homeowners and securing their lives. The company's brands include
Master Lock security products, MasterBrand cabinets, Moen
faucets, Simonton windows and Therma-Tru entry door systems. The
company currently has a Zacks Rank #1 (Strong Buy).
Other companies performing well in the retail home furnishing
Haverty Furniture Companies Inc.
Restoration Hardware Holdings Inc.
). Of these, Haverty and Restoration Hardware carry a Zacks Rank
#1 (Strong Buy), while Kirkland's has a Zacks Rank #2 (Buy).