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Crane (CR) Closes Acquisition of Crane Currency for $800M


Crane Co. CR yesterday announced that it has completed the acquisition of 100% equity stake in Boston-based Crane & Co., Inc. (Crane Currency) from Lindsay Goldberg — a private equity firm, Crane’s family members and other shareholders.

Crane Currency designs and manufactures secure and highly-engineered banknotes for more than 50 central banks in the world, providing employment to nearly 1,100 people. Also, it engages in substrates manufacturing and providing advanced micro-optic security technology to its customers. The firm, founded in 1801, has an addressable market size of $4.4 billion. Its revenues in 2017 are estimated to total $500 million while adjusted earnings before interest, tax, depreciation and amortization (EBITDA) are likely to be $94 million.

The deal was originally announced on Dec 5, 2017. Since then, Crane Co.’s shares have yielded 9.5% return, outperforming 5.1% gain of the industry it belongs to.

Details of the Buyout

As noted earlier, the buyout consideration of $800 million represents roughly 8.5x of Crane Currency’s estimated adjusted EBITDA for 2017. It was financed with available cash and funds secured from additional debts.

The Crane Currency buyout is expected to strengthen Crane Co.’s foothold in the currency and payments market. The combined business will have enhanced resources and technological expertise to leverage benefits from future growth opportunities.

Crane Co. anticipates that the Crane Currency buyout will add roughly 15 cents to earnings per share in the initial year post completion. This accretion is projected to increase to $1 by 2021. Further, the company believes that this transaction will enable it to grow its earnings per share by more than 10% in the years ahead.

Over time, Crane Co. has acquired meaningful businesses and disposed non-core assets to improve its business portfolio. In May last year, the company acquired Westlock Controls — a specialist in manufacturing and distribution of switchboxes, position transmitters and other solutions for use in networking, monitoring and controlling process valves.

Zacks Rank & Stocks to Consider

With a market capitalization of nearly $5.4 billion, Crane Co. currently carries a Zacks Rank #3 (Hold). The stock’s earnings estimates for 2018 were revised upward by two brokerage firms in the last 60 days and lowered by one. Currently, the Zacks Consensus Estimate is pegged at $5.00 for 2018, representing growth of 1 cent from the tally 60 days ago.

Crane Company Price and Consensus

Crane Company Price and Consensus | Crane Company Quote

Some better-ranked stocks in the industry are Hitachi Ltd. HTHIY, ITT Inc. ITT and Raven Industries, Inc. RAVN. While Hitachi sports a Zacks Rank #1 (Strong Buy), both ITT Inc. and Raven Industries carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hitachi’s earnings estimates for fiscal 2018 and fiscal 2019 were revised upward in the last 60 days. Also, the company delivered an average positive earnings surprise of 85.83% in the last four quarters.

ITT Inc’s average earnings surprise for the last four quarters was a positive 8.08%. Also, its earnings estimates for 2018 improved in the last four quarters.

Raven Industries’ earnings estimates for fiscal 2018 and fiscal 2019 were revised upward in the last 60 days. Also, the company pulled off an average positive earnings surprise of 25.84% in the last four quarters.

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