Berry Plastics' (BERY) Price Target Raised to $56 at Deutsche Bank Following AEP Deal
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Deutsche Bank maintained a Buy rating on Berry Plastics Group (NYSE: BERY) and raised its price target to $56.00 (from $52.00). Analyst Debbie Jones called its dealt to acquire AEP "attractive."
"BERY announced before-market-open (8/25) its agreement to acquire AEP Industries (ticker: AEPI) for $765M, including net debt. AEP is a manufacturer of flexible plastic films in NA. The company’s LTM adj. EBITDA was $103M (~9% margin), but BERY expects to achieve synergies of $50M. This implies a pre and post synergy multiple of 7.4x and 5.0x, respectively. We estimate that the acquisition could be accretive to EPS in Year 1 by high-single-digits depending on assumptions for timing of synergies, refinancing of AEP’s $200M 8.25% notes and the D&A step-up ," said Jones. "We view this deal favorably given the accretion and deleveraging nature. We would not be surprised to see synergy targets go meaningfully higher."
Shares of Berry Plastics Group closed at $45.39 yesterday.
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