SALEM, N.H. - Standex International Corporation (NYSE: NYSE:SXI) has acquired Amran Instrument Transformers and Narayan Powertech Pvt. Ltd., collectively known as the Amran/Narayan Group, for a combined enterprise value of $462 million. The deal, which is the largest in Standex's history, includes a mix of 85% cash and 15% Standex common stock for Amran, and 90% cash and 10% stock for Narayan, subject to regulatory approval in India.
The acquisition is financed through cash-on-hand, existing credit facilities, and a $250 million term loan, which the company plans to refinance under its existing credit facilities in the coming weeks. Standex intends to reduce its leverage below a 1.0x net debt to EBITDA ratio within two years post-transaction.
Amran/Narayan Group, with manufacturing locations in the U.S. and India, is a leading manufacturer of low and medium voltage instrument transformers. Their products are used in electrical grid applications and have been installed in over 50 countries. The group expects to generate around $100 million in revenue with an adjusted EBITDA margin above 40% in calendar year 2024.
David Dunbar, President and CEO of Standex, emphasized that the acquisition aligns with the company's strategy to accelerate growth in high-margin, fast-growing markets. The integration is expected to increase Standex's consolidated adjusted EBITDA margin by over 200 basis points in the first full year.
The founders and leadership team of Amran/Narayan Group will remain with the combined company, bringing their expertise to support integration and innovation efforts. The transactions are anticipated to be immediately accretive to Standex's revenue growth, EBITDA margin, operating margin, earnings per share, and free cash flow, excluding acquisition and integration related costs.
The acquisition significantly expands Standex's presence in the electrical grid market and is expected to create cross-selling opportunities due to complementary product offerings. Amran/Narayan Group will be reported within Standex's Electronics business segment.
Standex hosted a conference call today to discuss the acquisitions alongside its first quarter financial results. Guggenheim Securities LLC and Foley Hoag LLP, among others, served as advisors on the transactions.
This news is based on a press release statement and reflects the current expectations and projections about the companies' performance.
In other recent news, Standex International Corporation reported record profit and cash generation for fiscal 2024, despite a decrease in sales. The company also announced a 6.7% increase in its quarterly cash dividend to $0.32 per share, marking its 241st consecutive quarterly cash dividend. Standex's Engineering Technologies segment experienced a 15.7% increase in revenue, even as some segments saw a decrease in sales.
Further, Standex shareholders approved an amendment granting the Board of Directors the authority to determine the number of directors within a set range. The company's 2018 Omnibus Incentive Plan was also amended to include 450,000 additional shares, receiving approval from the shareholders.
Additionally, Standex has shown a commitment to investing in research and development, with plans to launch a significant number of new products in fiscal 2025, projected to generate sales exceeding $110 million in fast-growth markets. The company reaffirmed their long-term financial outlook for fiscal year 2028, targeting high single-digit organic growth and improved profitability metrics.
These are recent developments from Standex, which concluded its fiscal fourth quarter with $347 million in available liquidity and a net cash position of $5.3 million. Standex's strategy includes a pipeline of over a dozen new products, aiming for higher margins and incremental gross margin impact.
InvestingPro Insights
The acquisition of Amran/Narayan Group by Standex International Corporation (NYSE: SXI) aligns well with the company's financial profile and growth strategy. According to InvestingPro data, Standex has a market capitalization of $2.14 billion and has demonstrated strong financial performance with a revenue of $720.63 million in the last twelve months as of Q4 2024.
InvestingPro Tips highlight Standex's commitment to shareholder value, noting that the company "has raised its dividend for 14 consecutive years" and "has maintained dividend payments for 54 consecutive years." This track record of consistent dividend growth suggests a stable financial foundation, which could support the integration of the newly acquired companies.
The acquisition's focus on high-margin business aligns with Standex's current profitability metrics. InvestingPro data shows an operating income margin of 15.58% in the last twelve months, indicating the company's ability to generate profit from its operations. The expected increase in consolidated adjusted EBITDA margin by over 200 basis points from the Amran/Narayan acquisition could further enhance this profitability.
Additionally, an InvestingPro Tip states that Standex "operates with a moderate level of debt," which is crucial given the substantial $462 million enterprise value of the acquisition. This moderate debt level, combined with the company's plan to reduce leverage below a 1.0x net debt to EBITDA ratio within two years, suggests a prudent approach to financial management.
For investors seeking more comprehensive analysis, InvestingPro offers 6 additional tips that could provide further insights into Standex's financial health and growth prospects.
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