GUD’s Acquisition of Disk Brakes Australia Is EPS-Accretive but Questionable from a Strategic Sense
No-moat-rated GUD Holdings has acquired Disk Brakes Australia, or DBA, a manufacturer and supplier of disc brake rotors, brake drums and disc brake pads. The total purchase price of AUD 20 million represents just over 6 times DBA’s annual EBIT. While the price appears cheap relative to the 10-13 times EBIT GUD typically trades at, from a long-term strategic perspective the acquisition is somewhat questionable. Growing penetration of electric vehicles, or EVs, is a key risk for GUD, given its hea...GUD Holdings is engaged in the manufacture and importation, distribution and sale of cleaning products, household appliances, warehouse racking, industrial storage solutions, office storage products, automotive products, locking devices, pumps, pool and spa systems, and water pressure systems, with operations in Australia, New Zealand, France, Spain, China, Malaysia and Hong Kong. Co.'s reportable segments are Oates, Automotive (Ryco, Wesfil, Goss), Davey, Dexion, and Lock Focus.
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