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said it will buy
a manufacturer of night vision goggles and released great preliminary results for the fourth quarter.
The proposed $ 8 billion cash-and-stock deal values FLIR (ticker: FLIR) shares at around $ 56, or 28% more than in 2020. FLIR shareholders will receive $ 28 cash and $ 0. 0718 one share of Teledyne (TDY) for each share of FLIR held.
This is one case where a defense company gets a little bigger within the industry. About a quarter of Teledyne’s sales go directly to the US. S.. . Department of Defense, although it sells to other defense companies as well. FLIR does the same; About a third of sales come from the Pentagon. Both companies also sell sensors and devices for consumer and industrial use.
“Our two companies are centered around proprietary sensor technologies. Our business models are also similar: we provide our customers with sensors, cameras and sensor systems, ”said Robert Mehrabian, CEO of Teledyne, in the company’s press release.
Teledyne is targeting approximately $ 80 million in annual cost savings and other benefits from the deal. That is around 11% of the combined company’s operating profit over the past 12 months.
The deal values FLIR at 17 times its estimated earnings before interest, taxes, depreciation and amortization for 2021. That honestly doesn’t look too high as FLIR has been trading around 15x the Ebitda in the past few years. Deals are often made at a premium to historical averages in order to entice the target company’s shareholders into selling. The price is below the record high of $ 63 FLIR stock set in late 2018.
Teledyne stock remained unchanged in premarket trading, an indication that investors are okay with the deal. In a stock deal, as opposed to a cash purchase, stocks in the acquiring company can exert pressure as traders sell those stocks and buy stocks of the target for an arbitrage profit.
One reason Teledyne stock may hold up is because of the earnings news. Teledyne said fourth quarter revenue and earnings per share should be around $ 800 million and about $ 3, respectively. 17th. Wall Street was targeting sales of $ 793 million and earnings per share of $ 2. 75.
Teledyne’s strong profits are a positive sign for other defense electronics companies, including
(RTX) and the smaller one
Teledyne and FLIR have scheduled a conference call for investors and analysts at 11 a.m.. m. Eastern time to discuss the deal.
Teledyne stock gained around 13% in 2020, a result not far from the gains in the
Dow Jones industry average.
However, FLIR stock fell about 16%. .
Barron’s FLIR stock was added to a list of names for « Covid Reopening » in May 2020 as the company’s sensor technologies can be used to check people’s temperatures in a contactless manner. FLIR stock was around $ 44. 50 when this article appeared. Since then, the shares have remained unchanged – until the acquisition.
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Teledyne Technologies, FLIR Systems, Teledyne, Stock, NASDAQ: FLIR
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