Recently,Cimpress N.V. CMPR inked a definite agreement to acquire BuildASign — a premium online provider of signage, canvas wall décor and other types of large format products. This $280-million buyout is in sync with the company’s merger & acquisition strategy, and will likely strengthen its Print, Upload and Vistaprint businesses, moving ahead.
Inside the Headlines
BuildASign offers high quality canvas prints to customers at affordable prices through its website www.easycanvasprints.com. Other websites of the company, like www.buildasign.com,assist in providing services for business-identification display. Reflecting an above 20% year-over-year growth rate, BuildASign’s unaudited trailing 12-month (ended Aug 31, 2018) revenues were roughly $129 million.
Cimpress believes acquisition of BuildASign will bring in robust workforce talent, a stellar customer-centric culture, non-imitable e-commerce capabilities and low-cost production operations within its business. BuildASign’s less-pricy canvas print fulfilment operations will help in boosting the company’s Vistaprint businesses’ home-decor revenues. Additionally, Cimpress notes that BuildASign will complement the product offerings of its other businesses, such as Print and Upload. This acquisition is consistent with Cimpress’ targeted merger & acquisition-investment strategy, through which it aims to secure 15% internal rate of return.
On the other hand, the mass customization platform (MCP) technological expertise of Cimpress will add strength to BuildASign’s existing business. The company will also provide substantial procurement synergies and new long-term investment opportunities for BuildASign. Post acquisition, BuildASign will function as an autonomous and decentralized organization.
Per the agreement, Cimpress will obtain nearly 99% outstanding equity interests of BuildASign from its existing owners —Perella Weinberg Partners and PWP Growth Equity. The transaction, currently subject to customary adjustments, is anticipated to conclude by early October. Cimpress will fund the deal through cash payments, using its existing credit facility.
Price Performance
On a year-to-date basis, Cimpress’ shares have rallied 18%, outperforming 9.1% growth recorded by the industry it belongs to.
This Zacks Rank #3 (Hold) stock is poised to grow on the back of new investments and superior customer relationships. However, rising cost of sales, high debt burden and weak liquidity remain major causes of concern for the company.
Stocks to Consider
Some better-ranked stocks in the Zacks Industrial Products sectorare listed below:
Atkore International Group Inc. ATKR sports a Zacks Rank of 1 (Strong Buy). The company pulled off an average positive earnings surprise of 24.46% over the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
ABB Ltd ABB carries a Zacks Rank #2 (Buy). The company generated an average positive earnings surprise of 12.03% over the preceding four quarters.
Advanced Emissions Solutions, Inc. ADES also carries a Zacks Rank of 2. The company delivered an average positive earnings surprise of 16.40% during the same time frame.
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