Brady Corporation Plans to Acquire Gravotech Holding
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Insights
The acquisition of Gravotech by Brady Corporation represents a strategic move aimed at expanding Brady's market reach and product offerings in the specialized marking and engraving industry. Gravotech's established presence in key international markets, including the U.S., Latin America, Europe and Asia-Pacific, aligns with Brady's global expansion goals. The complementary nature of Gravotech's product line can potentially enhance Brady's existing portfolio, particularly in the area of precision direct part marking and engraving.
From a market perspective, the integration of Gravotech's technology and customer base could open new sales channels for Brady and enhance its competitive position. However, the success of this acquisition will depend on Brady's ability to integrate Gravotech's operations and realize the anticipated synergies. The acquisition's immaterial impact on earnings per diluted share for the current fiscal year suggests that investors might expect more significant financial benefits in the longer term as integration progresses.
Brady's plan to fund the acquisition through cash and existing credit facilities is a prudent financial strategy that appears to avoid overleveraging the company. The reported purchase price of approximately USD 133 million, relative to Gravotech's last year sales of USD 121 million, implies a revenue multiple of just over 1x, which could be seen as reasonable in the current economic climate, assuming Gravotech's profitability aligns with industry standards.
Investors should monitor the post-acquisition integration closely, as the true value of the deal will be realized through cost savings, cross-selling opportunities and potential market expansion. The statement from Brady's CEO highlights the intent to leverage Brady's global footprint to grow Gravotech's addressable market, which could signal future revenue growth potential. It will be important to assess how this acquisition aligns with Brady's long-term strategic objectives and the potential impact on its balance sheet and cash flow.
The acquisition reflects a trend in the industrial sector where companies are seeking to broaden their technological capabilities and product lines to better serve a diverse set of industries. Gravotech's expertise in specialized engraving and marking technologies, including laser and mechanical engraving, complements Brady's high-performance industrial printers and adhesive materials. This could allow Brady to offer more integrated solutions to customers in the electronics, telecommunications, manufacturing, electrical, construction, medical, aerospace and other industries.
Given the technical nature of the products involved, the success of this acquisition will also hinge on Brady's ability to maintain Gravotech's innovation momentum and product quality. The long-term impact on the business will likely depend on how effectively Brady can integrate Gravotech's technologies and maintain its reputation for innovative and differentiated solutions in the specialized marking and engraving market.
MILWAUKEE, March 15, 2024 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (“Brady”) announced today that it has entered into exclusive negotiations to acquire Gravotech Holding (“Gravotech”) for approximately EUR 123 million (approximately USD 133 million). Brady expects to fund the transaction with cash on hand as well as with borrowings on its existing credit agreement, and expects to close the transaction by the end of its fiscal year ending July 31, 2024, subject to prior completion of the information-consultation processes under French law and closing conditions, including regulatory clearances.
Gravotech, with sales of EUR 112 million (approximately USD 121 million) in the year ending December 31, 2023, is a leader in specialized marking and engraving solutions intended for a variety of industries and applications. Gravotech was founded in 1938 and is headquartered in Lyon, France. Gravotech is a leader in the design, manufacture and distribution of innovative solutions for specialized engraving, marking and cutting, offering laser, mechanical engraving, scribing and dot peen capabilities. It manufactures machines and consumables and develops CAD software, and has an international presence in the U.S., Latin America, Europe and Asia-Pacific. Brady is a leader in high-performance industrial printers and adhesive materials, and the acquisition of Gravotech will add specialized direct part marking and engraving capabilities to Brady’s extensive product identification offering.
“Gravotech is a highly regarded France-based company that is well-known globally for its innovative and differentiated solutions,” said Brady’s President and Chief Executive Officer, Russell R. Shaller. “The planned acquisition of Gravotech expands our product offering into precision direct part marking and engraving, with a product offering complementary to Brady’s. We would intend to grow Gravotech’s addressable market through Brady’s global footprint throughout Europe, Asia and the Americas.”
Excluding acquisition-related costs, Brady expects this acquisition to be immaterial to earnings per diluted share for the remainder of the fiscal year ending July 31, 2024.
Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect people, products and places. Brady’s products help customers increase safety, security, productivity and performance and include high-performance labels, signs, safety devices, printing systems and software. Founded in 1914, Brady has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, medical, aerospace and a variety of other industries. Brady is headquartered in Milwaukee, Wisconsin and as of July 31, 2023, employed approximately 5,600 people in its worldwide businesses. Brady’s fiscal 2023 sales were approximately
In this news release, statements that are not reported financial results or other historic information are “forward-looking statements.” These forward-looking statements relate to, among other things, the Company's future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations.
The use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project,” “plan” or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to risks, assumptions, and other factors, some of which are beyond Brady’s control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including any statements regarding the potential timing of or completion of the acquisition of Gravotech, and any financial impacts of that transaction. For Brady, uncertainties arise from: the occurrence of any event, change or other circumstances that could give rise to the termination of the offer to acquire Gravotech; the expected timing and likelihood of completion of the proposed transaction with Gravotech, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the offer that could reduce anticipated benefits or cause the parties to abandon the transaction; the risk that the proposed offer and its announcement could have an adverse effect on the ability of Brady and Gravotech to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers and on their operating results and businesses generally; increased cost of raw materials and labor as well as material shortages and supply chain disruptions; decreased demand for our products; our ability to compete effectively or to successfully execute our strategy; our ability to develop technologically advanced products that meet customer demands; difficulties in protecting our websites, networks, and systems against security breaches; Brady’s ability to identify, integrate, and grow acquired companies, and to manage contingent liabilities from divested businesses; risks associated with the loss of key employees; extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities; litigation, including product liability claims; adverse impacts of regional epidemics or global pandemics; foreign currency fluctuations; potential write-offs of goodwill and other intangible assets; changes in tax legislation and tax rates; differing interests of voting and non-voting shareholders and changes in the regulatory and business environment around dual-class voting structures; numerous other matters of national, regional and global scale, including major public health crises and government responses thereto and those of a political, economic, business, competitive, and regulatory nature contained from time to time in Brady’s U.S. Securities and Exchange Commission filings, including, but not limited to, those factors listed in the “Risk Factors” section within Item 1A of Part I of Brady’s Form 10-K for the year ended July 31, 2023.
These uncertainties may cause Brady's actual future results to be materially different than those expressed in its forward-looking statements. Brady does not undertake to update its forward-looking statements except as required by law.
For More Information:
Investor contact: Ann Thornton 414-438-6887
Media contact: Kate Venne 414-358-5176
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