Luxfer Holdings, an engineered materials manufacturer, has announced the acquisition of Worthington Industries’ Structural Composites Industries (SCI) business in a cash deal worth $20 million.
Notably, Worthington’s (WOR) Structural Composites produces DOT (Department of Transportation) approved composite cylinders for commercial, military, and aerospace applications.
Luxfer’s (LXFR) CEO Alok Maskara said that the addition of SCI “significantly enhances our product offering and fortifies our capabilities in alternative fuels and aerospace applications.” He added that it would also ramp up its manufacturing capacity, drive innovation and enhance service offerings.
Notably, the acquisition of the SCI business is likely to dilute Luxfer’s 2021 earnings and is expected to be accretive to 2022’s adjusted earnings. The company expects to generate significant cost and revenue synergies within the first three years of acquisition. Furthermore, the deal is likely to help the company capitalize on the growth opportunities in the CNG (compressed natural gas) and Hydrogen.
SCI will become part of its Gas Cylinders and would operate under the Luxfer brand. (See Luxfer stock analysis on TipRanks)
Following the deal announcement, Roth Capital analyst Craig Irwin raised the price target to $30 (about 36% upside potential) from $22.50. Irwin maintains a Buy rating on the stock and expects to see strong growth in hydrogen and alternative fuel markets.
Turning now to the rest of the Wall Street community, Luxfer has a Moderate Buy consensus rating based on 2 unanimous Buys. The average analyst price target of $27.25 implies upside potential of about 23.5% to current levels, given the share price rally of about 87% over the past year.
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