Engineered products and solutions provider Barnes Group (NYSE:B) has agreed to sell its Associated Spring and Hänggi businesses to One Equity Partners in a $175 million deal. The strategic M & A move is expected to fortify the company’s balance sheet.
Barnes plans to utilize the net cash proceeds of $150 million from the deal towards paring down its debt. The company aims to reach a net debt-to-EBITDA ratio of 3 or lower by the end of this year. Further, it plans to achieve a leverage ratio of 2.5 by next year.
Barnes’ three-pronged growth strategy involves scaling its Aerospace business, consolidating and rationalizing the Industrial segment, and continuing execution in its core business. The deal with One Equity is part of the company’s aim to rationalize its Industrial business.
Notably, Barnes’ recent acquisition of MB Aerospace and today’s divestiture tilt its portfolio towards higher growth and margin avenues. As a result, the Aerospace segment will now contribute a major part to Barnes’ consolidated top line.
The deal is anticipated to close in early 2024. Separately, the company is slated to announce its fourth-quarter results on February 16. Analysts expect Barnes to generate an EPS of $0.35 on revenue of $398.9 million for the quarter. In the comparable year-ago period, Barnes’ EPS of $0.52 was better than estimates by $0.03.
What is the Target Price for Barnes Group?
Overall, the Street has a Moderate Buy consensus rating on Barnes. Following a nearly 7% jump in the company’s share price over the past month, the average B price target of $29.67 points to a 2.4% potential downside in the stock.
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