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Linamar Completes Salford Group Acquisition, Expanding Its Agriculture Portfolio
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Linamar Completes Salford Group Acquisition, Expanding Its Agriculture Portfolio

Story Highlights

Linamar’s acquisition of Salford Group seems to make sense, as management believes it is complementary to its existing operations. Furthermore, both insiders and analysts are currently confident that the stock will perform well, going forward.

Linamar (TSE: LNR) (LIMAF) is a diversified manufacturing company that engages in engineered products powering vehicles, motion, work, and lives. It operates through the following segments: Transportation and Industrial.

The company recently announced that it completed its acquisition of Salford Group. For a price tag of C$260 million, Linamar will be able to expand its agriculture portfolio.

Thanks to Linamar’s acquisition of MacDon in 2018, it already has a market-leading position in the harvesting segment. Salford Group will give the company a foothold in tillage and crop nutrition, which management believes will be a natural complement to the MacDon product portfolio.

Indeed, CEO Linda Hasenfratz had the following to say, “Salford is an outstanding brand in farm tillage and crop nutrition. Together with our current ag division, MacDon, we have a solid foundation from which to execute our agriculture strategy going forward. We are thrilled to welcome the Salford Group into the Linamar family today.”

The acquisition was funded by the funds available on its credit facilities.

Insider Transactions

When analyzing insider transactions, you can see that Mark Stoddart, the company’s Chief Technology Officer, sold almost C$2 million worth of shares. Indeed, Mark Stoddart has been selling pretty heavily over the course of the past year, offloading about C$11.43 million worth.

Nevertheless, the CTO still owns approximately C$28 million of Linamar stock, which is quite substantial. In addition, insiders have an overall positive outlook on Linamar stock as the TipRanks Insider Confidence Signal is positive and above the sector average.

Analyst Recommendations

Linamar has a Strong Buy consensus rating based on three Buys and one Hold rating assigned in the past three months. The average Linamar price target of C$74.50 implies 31% upside potential.

Final Thoughts

Linamar’s acquisition of Salford Group seems to make sense, as management believes it is complementary to its existing operations. Furthermore, both insiders and analysts are currently confident that the stock will perform well, going forward. As a result, the recent pullback in the stock price may make Linamar worth considering.

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