Raven Industries, Inc. (RAVN – Free Report) announced an update on its deal with CNH Industrial N.V. (CNHI – Free Report) , signed in June 2021. The transaction was green lighted by the company’s shareholders at a special meeting held yesterday.
In the last trading session, shares of Raven dipped 0.24%, closing at $57.60.
Raven is based in Sioux Falls, SD and is one of the leading companies engaged in providing precision agriculture technology. It has three divisions, namely Aerostar, Engineered Films and Applied Technology. Its revenues totaled $348.4 million in the 12 months ended Jan 31, 2021.
Inside the Headlines
The deal was approved by 99% of the nearly 71% of Raven’s stakeholders that voted at the special meeting. The completion of the transaction is expected in the fourth quarter of 2021 after receiving necessary approvals from the Defense Counterintelligence and Security Agency (DCSA) and the Committee on Foreign Investment in the United States (CFIUS).
A brief discussion on the signed agreement is provided below:
The deal inked between the parties calls for the buyout of Raven by CNH Industrial. The transaction was valued at $58 per share or $2.1 billion enterprise value and will be funded by CNH Industrial with available cash.
The transaction is expected to enhance Raven’s capabilities in the agriculture technology space and boost its shareholder value. CNH Industrial plans to take a strategic review of Aerostar and Engineered Films divisions after the transaction is over. While Aerostar is a leader in the stratospheric platform industry, Engineered Films is well-known in the performance specialty films industry. The review will help boost the capabilities of both divisions and enhance shareholder value.
By calendar year 2025, the Raven-CNH Industrial transaction is anticipated to generate revenues (run-rate) worth $400 million. Incremental earnings before interest, tax, depreciation and amortization are expected to be $150 million.
Zacks Rank, Price Performance and Estimates
With a market capitalization of $2.1 billion, Raven currently sports a Zacks Rank #1 (Strong Buy). In the past three months, shares of the company have surged 41.2% compared with the industry’s growth of 7.3%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for earnings is pegged at 82 cents per share for fiscal 2022 (ending January 2022) and $1.21 for fiscal 2023 (ending January 2023), indicating growth of 1.2% and 11% each from the respective 60-day-ago figures. Earnings estimates for the third quarter of fiscal 2022 (ending October 2021) are pegged at 21 cents, implying a decrease of 19.2% from the 60-day-ago number.