Premium railroads manufacturing company L.B. Foster Co. (FSTR) has recently strengthened its automated and international solutions’ trade with the acquisition of TEW Engineering Ltd. The deal, closed for an undisclosed amount, comes as part of the company’s inorganic growth plans.
Acquisition Reimbursements
L.B. Foster aims to earn higher revenues and margins in the upcoming quarters by strategically expanding the scope of its global business. By acquiring the U.K.-based equipment supplier, L.B. Foster intends to expand its share in the global rail market.
The acquired company, TEW Engineering Ltd., boasts over 100 years of expertise in rail solutions provision and generated revenues worth $16.9 million in 2014. Thus, L.B. Foster expects the strategic acquisition to be accretive to its earnings in 2015. Moreover, the company plans to expand its business in the European marketplaces with the cooperation of the newly-acquired firm, which would operate as a subsidiary of L.B. Foster Rail Technologies.
The Acquirer
L. B. Foster is a leading friction management solutions provider in the global railway industry. Its solutions are used for increasing the efficiency of fuel consumption and lowering the depreciation of freight as well as transit railways. The company, holding a high brand image in the market, constantly aims to enhance its shareholders’ value.
L.B. Foster Rail Technologies, a wholly-owned subsidiary of L.B. Foster, provides a wide range of consumables and proprietary systems that helps in controlling friction between rail and wheel in freight and transit rail functions. Such products aid in minimizing the depreciation of wheel interfaces.
The Acquiree
TEW Engineering is a prominent equipment supplier in the global rail and industrial sector. The company provides non-imitable modernized engineering solutions, mimic diagrams, passenger information systems and dynamic displays to the firms conducting trade within the industrial and rail sector. The company is highly competent in terms of technological expertise and also possesses effective marketing skills.
Moving Forward
L.B. Foster aims at earning higher margins and revenues on the back of its organic and inorganic growth strategy. A few days back, the company strengthened its midstream market business by acquiring the Texas-based Chemtec Energy Services. Through the acquisition, the company aims to diversify its energy product and services portfolio in the global energy market.
The acquisition of TEW Engineering Ltd. also boosts L.B. Foster’s inorganic growth trajectory. We expect the company to win the confidence of its shareholders, in the wake of such productive improvement plans.
With a market capitalization of $507.41 million, L.B. Foster holds a Zacks Rank #2 (Buy). Other stocks worth considering in the industry include Mechel OAO (MTL), Cross Country Healthcare, Inc. (CCRN) and Calmare Therapeutics Inc. (CTTC). All three stocks carry a Zacks Rank similar to that of L.B. Foster.
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