Bermuda-based business services and industrial operations provider Brookfield Business Partners LP (BBU), along with institutional partners, has signed an agreement to acquire DexKo Global for $3.4 billion.
Michigan-based DexKo manufactures highly engineered components for recreational vehicles, trailers and towable equipment providers. Brookfield Business Partners is a subsidiary of Brookfield Asset Management (BAM).
The Managing Partner of Brookfield Business, Mark Weinberg, said, “DexKo’s world-class management team has delivered consistently strong performance and we are excited to partner with them to further build on an established track record of value creation.”
The acquisition will involve around $1.1 billion of equity funding. Out of this amount, Brookfield will invest nearly $400 million and institutional partners will put in the rest.
The acquisition is expected to close by the end of this year. (See Brookfield stock chart on TipRanks)
Last month, Credit Suisse analyst Andrew Kuske upgraded the rating on Brookfield Business to Buy from Hold, and reiterated a price target of $52 (13% upside potential).
In a research note to investors, the analyst said, “We are closer in time to large scale monetizations and the continued possibility of meaningful deployments. The scale of an economic recovery also favors Brookfield Business Partners’ exposure.”
Overall, the stock has a Strong Buy consensus rating based on 7 Buys. The average Brookfield Business Partners price target of $56.83 implies 23.4% upside potential. The company’s shares have gained 40% over the past year.
According to TipRanks’ Smart Score rating system, Brookfield scores a “Perfect 10”. This suggests that the stock is likely to outperform market averages.
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