Compass Diversified Holdings (CODI) clinched the acquisition of domestic canned heat and table lighting products provider Candle Lamp Company LLC (SternoCandleLamp). The deal was valued at $163 million.
The purchase was financed via the company’s revolving credit facility. The price was based on an enterprise value of $161.5 million, with around $2.7 million incurred as expenses related to the acquisition. As part of the deal, CODI also gave $91.6 million to SternoCandleLamp as loan. Compass Diversified will be the sole owner of SternoCandleLamp’s common equity, to begin with.
Headquartered in Corona, CA, SternoCandleLamp is an established brand in the food heating and table lighting industry, and offers a broad portfolio of products to cater to the needs of its institutional foodservice and consumer clientele. It produces and markets portable food-warming fuel and creative table lighting solutions.
SternoCandleLamp generated net revenues of about $133.6 million in the year ended Dec 31, 2013. More recently, its EBITDA for the 12 months ended Sep 30, 2014 came in at around $20 million. Compass Diversified expects SternoCandleLamp to be accretive to its cash flow to the extent of roughly 20 cents per share on an annual basis.
Compass Diversified, a U.S. holding company, owns leading middle market businesses, and is constantly on the lookout for companies with a dominant market position, validated management, robust and steady cash flow and compelling growth prospects. Each of its current subsidiaries is a leader in its niche market segment.
The SternoCandleLamp acquisition takes the total number of businesses owned by the company to 9, aside from a 41% stake in Fox Factory Holding Corp. (FOXF). In August, it acquired Clean Earth Holdings Inc, a leading provider of cost-effective land-fill avoidance solutions, for $253 million. The two acquisitions are expected to considerably enhance the company’s earnings power.
Compass Diversified currently sports a Zacks Rank #2 (Buy). Other stocks in the diversified operations industry that look promising and are worth a look include CLARCOR Inc. (CLC) and Noble Group Ltd. (NOBGY), each carrying the same rank as Compass Diversified.
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