Darling Ingredients Inc. (DAR) has agreed to acquire Brazil’s FASA Group for a consideration of $560 million. DAR converts food waste into sustainable products and renewable energy through its 250 plants located across 17 countries.
Meanwhile, FASA Group is the biggest independent rendering company in Brazil and processes over 1.3 million metric tons per year. It has 14 rendering plants, with two more plants under construction.
Management Weighs In
The Chairman and CEO of Darling Ingredients, Randall C. Stuewe, commented, “Brazil is a leader in global agricultural commodities growth and is expected to take on a bigger role in the world’s meat production, making it a premier location for rendering growth.”
He further added, “FASA will also supplement Darling Ingredients’ global supply of waste fats, making it a leader in the supply of low-carbon waste fats and oils in North and South America to be used in the production of renewable diesel.”
The acquisition is anticipated to close by the end of 2022.
Additionally, DAR is expected to announce its first-quarter numbers on May 10. TipRanks data indicates the Street expects DAR to report earnings per share of $1.1. In the corresponding year-ago period, DAR reported earnings per share of $0.90 versus a consensus of $0.62.
Analyst’s Take
Cowen & Co. analyst Jason Gabelman has initiated coverage on the stock with a Hold rating and a price target of $80.
Overall, the Street has a Strong Buy rating on DAR based on seven Buys and a Hold. The average Darling Ingredients price target of $95.63 implies a potential upside of 26.81%. That’s on top of an 8% gain in share prices so far this year.
Closing Note
The company has a global footprint and caters to a range of industries, including pharmaceuticals, industrial, fuel, fertilizer, and pet food, which provides it with a diversified revenue stream while also shielding it from current macro headwinds in any particular region.
Additionally, the strategic acquisition of FASA bolsters DAR’s ability in renewable diesel production.
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