Thursday, March 6, 2014

Valmont Industries - Acquisition

VMI announced an acquisition on March 3rd.  Here is the press release:

Valmont Announces Acquisition Of A Leading Northern European Manufacturer Of Engineered Steel Products >VMI

Valmont Announces Acquisition of a Leading Northern European Manufacturer of Engineered Steel Products
PR Newswire
OMAHA, Neb.March 3, 2014
OMAHA, Neb.March 3, 2014 /PRNewswire/ -- Valmont Industries, Inc. (VMI) , a leading global provider of engineered products and services for infrastructure and mechanized irrigation equipment for agriculture, announced today that it has acquired privately-held DS SM A/S, a market leader in Northern Europe for the manufacture of heavy complex steel structures for a diverse range of industries including wind energy, offshore oil and gas, and electricity transmission. The Company, which will be renamed Valmont SM A/S, and will be reported in Valmont's Engineered Infrastructures Products Segment, has annual sales of approximately $190 million and operates two manufacturing locations in Denmark. The enterprise was valued at DKK 800 million (approximately $148 million) and DS SM's operating characteristics are similar to Valmont's other businesses within the Engineered Infrastructure Products Segment. Valmont expects the acquisition to be accretive to 2014 earnings.
DS SM ( part of DS Gruppen operates in three primary product segments.
   -- For wind energy, the company manufactures support structures for both the
      onshore and rapidly growing offshore wind market segments, as well as
      rotor housings for direct drive turbines.

   -- For the oil and gas industry, the company manufactures specialty
      equipment for offshore drilling rig stability. For offshore production
      platforms they also manufacture lifting and handling equipment such as
      cranes and winches.

   -- For the utility industry, DS SM manufactures engineered transmission
      support structures.

"DS SM is a premier engineered structures firm focused on energy infrastructure," said Vik Bansal, Group President of Valmont's Global Engineered Infrastructure Products Segment. "Support structures for the onshore/offshore wind and utility industries fit well with Valmont's existing competencies. This acquisition enables Valmont to participate in growing markets for wind energy, oil and gas exploration, power transmission and other related infrastructure projects, while giving us an attractive platform to expand our engineered infrastructure product lines across a broader geographic footprint."
"My management team and I are very pleased to be joining Valmont. We will maintain our 10% ownership interest in DS SM and we believe that Valmont provides the best strategic fit for DS SM and enables the next growth phase for our company," added Claus Bo Jorgensen, CEO of DS SM.
Valmont is a global leader in designing and manufacturing poles, towers and structures for lighting and traffic, wireless communication and utility markets, industrial access systems, highway safety barriers and a provider of protective coating services. Valmont also leads the world in mechanized irrigation equipment for agriculture, enhancing food production while conserving and protecting natural water resources. In addition, Valmont produces a wide variety of tubing for commercial and industrial applications.
The Chump IRA has maintained a 2.2% (of portfolio) position in VMI since January 2014.  I initiated the position on October 1st, and built it up throughout October, 2013.  My average cost per share is $137.37, is up 9.66% since purchase.
I like when companies buy competitors, or companies in the same industry.  This seems like a decent fit for VMI, so I'll hold the position as long it doesn't get too over valued.  Here is a FAST Graph of VMI today:

Today's blended PE of 13.5 is still a good value, and well below historical levels.  I'll trim the position if the PE reaches 20, but until then, I'll hold barring any new information.

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