Shares of good natured Products Inc (GDNP) traded up to 20% higher on Wednesday morning after the earth-friendly product company announced it had signed a deal to acquire all Ex-Tech Plastics Inc’s operating assets.
good natured Products bought the manufacturer of high-quality, rigid plastic sheets and real estate assets owned by related company ETP Inc for approximately C$14.1 million in cash.
CEO Paul Antoniadis said, “We are extremely pleased to build on our long-standing partnership with Ex-Tech that dates back well before March 2016 when we acquired Ex-Tech’s bioplastic division. The combined entity positions us as one of North America’s leading commercial sheet extruders, serving over 200 thermoforming packaging companies across North America. This acquisition firmly secures the Company’s market positioning within our industrial roll stock market segment, while setting the stage for future expansion in production and manufacturing capabilities.”
The acquisition of Ex-Tech will nearly double good natured Products’ revenue and provide cost synergies in terms of eliminating the company’s existing outsourcing arrangement and its additional scale of operations. The Ex-Tech acquisition represents the company’s third acquisition in the past 12 months. (See Good Natured Products Inc stock analysis on TipRanks)
Yesterday, Raymond James analyst Steve Hansen reiterated a Buy rating on GDNP and a C$1.50 price target (24% upside potential).
Hansen stated, “In short, we believe Good Natured is superbly positioned to capitalize on consumer’s shifting preference away from petroleum-based plastics toward sustainable, plant-based packaging and everyday products. Coupled with the company’s unique strategy and transformative recent acquisitions, we see outsized growth opportunities ahead.”
The rest of the Street is bullish on GDNP with a Strong Buy consensus rating based on 3 Buys. The average analyst price target of C$1.70 implies a 40.5% upside potential to current levels.