Superior Industries (SUP) to Acquire UNIWHEELS for $715M
The manufacturer of aluminum wheels, Superior Industries International, Inc. SUP, has agreed to buy UNIWHEELS AG (UNIWHEELS) for around $715 million. The buyout will fortify Superior’s footprint in Europe and North America.
Headquartered in Germany, UNIWHEELS is the third largest supplier of aluminum wheels to the European OEM automotive market. The company is also Europe’s leading manufacturer of aluminum wheels for the automotive aftermarket.
Per the deal, Superior will immediately commence a tender offer for 100% of the outstanding shares of UNIWHEELS. The owner of 61% of UNIWHEELS' outstanding shares – UNIWHEELS Malta – has irrevocably agreed to tender its shares.
Superior Industries International, Inc. Price
Superior Industries International, Inc. Price | Superior Industries International, Inc. Quote
Completion of the tender offer, which is subject to the condition that at least 75% of the outstanding UNIWHEELS shares are tendered, is likely to close by May 2017. The transaction has been approved by the boards of directors of Superior and UNIWHEELS Malta.
This acquisition will be funded through a combination of debt, preferred equity and cash. The preferred equity will be purchased by TPG Growth, which is a middle market and growth equity investment platform of the global private investment firm, TPG.
Post buyout, Superior will become a leading global supplier of aluminum wheels. The acquisition will also help in diversifying the company’s customer base and end markets. In addition, the deal is likely to expand Superior’s geographic reach and enhance relationships with its OEM partners.
The transaction will be immediately accretive to Superior’s earnings per share. The company anticipates $15 million in annual run-rate synergies by 2020. Following completion of the transaction, the company intends to reduce its annual dividend from $0.72 per share to $0.36 per share.
Superior Industries has a product portfolio designed to suit current market trends. The company is poised to benefit from its cost-control strategies, investment in growth opportunities and share repurchases.
However, Superior Industries has underperformed the Zacks classified Auto/Truck-Original Equipment sub-industry in the last one year with respect to price performance, mainly due to operating inefficiencies and decline in revenues guidance. The stock gained around 15.5%, while the industry rose 19.5% over the same time frame.
Superior Industries currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same space include Allison Transmission Holdings, Inc. ALSN, American Axle & Manufacturing Holdings, Inc. AXL and Ferrari N.V. RACE. All three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Allison Transmission has a positive average earnings surprise of 3.38% for the last four quarters. American Axle & Manufacturing generated a positive average earnings surprise of 9.18% over the trailing four quarters. Ferrari has a positive average earnings surprise of 34.90% for the last four quarters.
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