Notable Mergers and Acquisitions 11/16: (LAWS) (COHU) (LZB) (GBCI)
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Founded in 1982, Mattic Industries is a leading distributor of rivets, fasteners and other industrial components throughout Western Canada. Similar to Lawson, the company also provides vendor managed inventory (VMI) services to customers.
Mattic has distribution centers in Surrey, British Columbia and Calgary, Alberta. Lawson Products gains 18 employees, including 10 sales representatives with the acquisition.
“Mattic has strong, long-lasting customer relationships and its employees are known for their deep product knowledge of fasteners and applications for the trucking industry,” said Michael DeCata, president and chief executive officer, Lawson Products.
“This acquisition complements both companies’ strengths in providing outstanding customer service, particularly within fleet management and the oil and gas industry. We’ve expanded Lawson’s footprint in North America and are positioned to immediately grow this business and capitalize on the Canadian market opportunity,” DeCata said.
“I’m proud of the Mattic team’s achievements and I’m thrilled to have found in Lawson a company that shares our values and our focus on being close to customers to meet their needs,” said John Matthew, president and founder, Mattic Industries.
Key sales and management members will continue in their leadership roles. John Matthew will remain on board during the transition. Third Coast Capital Advisors served as financial advisor to Lawson Products. Lawson Products’ acquisition of Mattic Industries closed November 15, 2016. Transaction consideration was not disclosed.
*** Cohu, Inc. (Nasdaq: COHU) announced that it has agreed to acquire Kita Manufacturing Co. LTD. (Kita), a Japan-based company that designs, manufactures and sells spring probe contacts used in final test contactors, probe cards, PCB test boards and connectors sold to customers worldwide.
Luis A. Müller, Cohu President and Chief Executive Officer, stated, “The acquisition of Kita adds key technology and manufacturing capability to our ITS business that, combined with our leading handler market share, enables significant growth in the $685 million contactor market. Kita has initiated a significant manufacturing capacity expansion in Osaka, Japan that will accelerate our plans.”
Kita’s current year sales are estimated to be $17 million. The purchase price is $15 million in cash to be funded out of Cohu’s existing cash reserves and the assumption of operating debt of $2.6 million net of cash acquired. The agreement also provides for up to $3 million of contingent earn-out cash consideration based on certain growth targets for revenue and profitability. The company will assume debt of $4.8 million associated with manufacturing capacity expansion in Osaka that is aligned with Cohu’s growth strategy. The transaction is subject to certain closing conditions and is expected to be completed during Cohu’s fiscal first quarter of 2017.
Following the acquisition, Kita will continue to be led by its current senior management team, including President Tomohiko Kita, and will combine with Cohu’s ITS contactor business unit to deliver a broad portfolio of solutions to customers.
Müller concluded “We are seeing opportunities to embed our thermal technology within contactors to better manage temperature and improve test yield. Kita offers an extensive portfolio of spring probes that are complementary to Cohu’s contactors and enable us to supply a total solution to our automotive and mobile customers. We expect this transaction to be accretive in 2017 and provide significant sales synergies.”
*** La-Z-Boy Incorporated (NYSE: LZB) announced it signed an agreement to acquire the license for the La-Z-Boy brand in the United Kingdom and Ireland from Furnico Ltd., which has been La-Z-Boy’s sales and distribution partner in the market for the past eight years. Annual wholesale revenue for this business is approximately $42 million, based on current exchange rates. Due to the licensing agreement in place today, La-Z-Boy Incorporated already captures approximately half of the sales volume. The agreement will be effective January 1, 2017, and its results will be reported in the company’s upholstery segment. The existing Furnico business outside of the La-Z-Boy license will continue with its normal operations.
The company also announced it acquired nine La-Z-Boy Furniture Galleries® stores from an independent dealer on November 1, 2016, with annual retail volume of approximately $35 million. The stores are located in the northeastern Pennsylvania market, with seven in the state, one in Dover, NJ and one in Middletown, NY. The transaction is a result of a planned retirement of the independent dealer and the mutually agreed-upon decision that selling the stores to La-Z-Boy Incorporated would be in the best interest of their employees while providing for the greatest stability and continuity of the business. The stores will become part of La-Z-Boy’s retail segment.
Kurt L. Darrow, Chairman, President and Chief Executive Officer, of La-Z-Boy Incorporated, said, “These two businesses represent approximately $77 million in annual sales volume. Because we were already recording a portion of this volume in our wholesale upholstery segment, these two transactions will contribute approximately $41 million of incremental sales volume, based on current exchange rates, to consolidated sales on an annual basis. While we continue to steadily build the La-Z-Boy brand throughout the U.S. and Canada through our 4-4-5 store growth strategy, we are identifying opportunities to monetize the brand’s value outside North America and expect there to be additional opportunities in other markets in the future.”
Based in Maidenhead, England, La-Z-Boy U.K., Ltd. will be led by Keith Wilson, who until recently was with Calligaris, serving as Director for its U.K. and Ireland business. He will work closely with Jeff Lillich, the head of La-Z-Boy’s Europe, Middle East and Africa business. A team will be recruited to support the growth of the business and its existing customers.
Doug Collier, Senior Vice President, Chief Marketing Officer and President International, of La-Z-Boy Incorporated, said, “Furnico has done an amazing job in growing the business and we intend to further enhance our position in the market by making investments in the brand and our digital presence. We thank David Winter, Paul Riding and the rest of the Furnico team for the outstanding work they have done, and look forward to a great future for the business.”
Darrow added, “As we continue to build our company-owned retail business with new La-Z-Boy Furniture Galleries® stores, it is also growing through acquisitions of stores from retiring independent dealers. The nine stores acquired are profitable, will be quickly integrated into our retail segment and be accretive. I would like to take the opportunity to thank Alyssa and Frank Hager, who opened their first store in Wilkes-Barre, PA, in 1997. They have been great partners, steadily building their business throughout their almost 20-year tenure, and we wish them all the best in their much-deserved retirement. As the company-owned retail segment grows, we are further able to capitalize on the combined wholesale/retail margin associated with our integrated retail strategy, which continues to deliver results.”
*** Glacier Bancorp, Inc. (Nasdaq: GBCI) announced the signing of a definitive agreement to acquire TFB Bancorp, Inc. (OTC: TBBN), the holding company for The Foothills Bank, a community bank based in Yuma, Arizona. The acquisition marks Glacier’s 18th acquisition since 2000, its seventh announced transaction in the past four years and its first entry into the state of Arizona. The Foothills Bank provides banking services to businesses and individuals in Arizona with four banking offices located in Yuma, Prescott, and Casa Grande. As of September 30, 2016, TFB Bancorp had total assets of $316 million, gross loans of $257 million and total deposits of $265 million.
The boards of Glacier and TFB Bancorp approved the transaction, which is subject to required regulatory approvals, TFB Bancorp shareholder approval, and other customary conditions of closing. The transaction provides for the payment to TFB Bancorp shareholders of a unit consisting of $7.36152 per share in cash and 0.607387 shares of Glacier common stock. Based on the closing price of $32.13 for Glacier shares on November 11, 2016, the transaction would result in an aggregate value of $62.4 million, or $26.88 per fully diluted TFB Bancorp common share. As of September 30, 2016, TFB Bancorp had tangible equity of $37.0 million. Upon closing of the transaction, which is anticipated to take place in the first quarter of 2017, The Foothills Bank will be merged into Glacier Bank and operate as a separate banking division under its existing name and with its existing management team.
“We're very excited to be adding The Foothills Bank to the Glacier family of banks,” stated Mick Blodnick, Glacier Bancorp’s President and Chief Executive Officer. “This is a terrific opportunity for us to enter Arizona with a highly respected and well managed community bank operating in several great market areas.” Randy Chesler, President of Glacier Bank added, “With a great core deposit base, strong customer relationships, and a talented management team and staff, The Foothills Bank continues to post outstanding operating results, solid growth and is one of the best performing banks in Arizona. We believe this outstanding team will be a great addition to Glacier Bank.” Blodnick noted, “Arizona represents a logical and long-targeted expansion of our core footprint and offers attractive long-term growth prospects with a solid economic base of transportation and logistics, government, tourism and agriculture. In addition, the transaction will be immediately accretive to Glacier's earnings per share, excluding one-time transaction costs.”
Mary Lynn Lenz, President and CEO of TFB Bancorp, commented, “We are excited to be partnering with the entire Glacier organization. Foothills has been serving customers in our communities for over 19 years and our commitment to those communities is very important. This partnership will allow our customers to benefit from enhanced product offerings and a greater lending ability throughout Arizona. Furthermore, our shareholders will be receiving stock in a high-performing bank that has consistently delivered incredible shareholder return and dividend payments.”
Glacier management will review additional information regarding the transaction in a conference call beginning at 9 a.m. Mountain Time on Wednesday, November 16, 2016. The call may be accessed by dialing (877) 561-2748 and the conference ID is 20835058. A slide presentation to accompany management’s commentary may be accessed from Glacier’s November 16, 2016 8-K filing with the SEC or at http://www.snl.com/IRWebLinkX/presentations.aspx?iid=1023792.
Glacier was advised in the transaction by D.A. Davidson & Co. as financial advisor and Miller Nash Graham & Dunn LLP as legal counsel. TFB Bancorp was advised by Keefe, Bruyette & Woods, a Stifel Company, as financial advisor, and Hogan Lovells US LLP as legal counsel.
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Related EntitiesStifel, Keefe, Bruyette & Woods, D.A. Davidson, Notable Mergers and Acquisitions, Earnings, Definitive Agreement
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