WEST CHICAGO, Ill. - Titan International , Inc. (NYSE:TWI), a global manufacturer of off-highway wheels and tires, announced today the acquisition of Carlstar Group LLC for approximately $296 million, a transaction that includes cash and stock. The deal, which closed today, is expected to be immediately accretive to Titan's earnings per share and operating margins in 2024.
Carlstar, a global manufacturer and distributor of specialty tires and wheels, reported 2023 revenues of around $615 million. The acquisition brings Carlstar's three U.S.-based manufacturing facilities and one in China under Titan's umbrella, along with twelve distribution centers in North America and Europe. The strategic move aims to diversify Titan's product portfolio, particularly in outdoor power equipment, power sports, and high-speed trailers—a market where Titan previously had no presence.
The transaction consists of $127 million in cash and $169 million in TWI equity, equating to approximately 11.9 million shares of Titan stock. To facilitate the cash portion of the acquisition, Titan secured a new $225 million credit facility. Post-acquisition, Titan's proforma net debt to Adjusted EBITDA leverage is expected to remain at approximately 1.3x.
Titan's CEO, Paul Reitz, expressed enthusiasm about the acquisition, highlighting Carlstar's strong market trajectory and the anticipated synergies from the merger. Chairman Maurice Taylor Jr. echoed these sentiments, emphasizing the strategic fit of Carlstar within Titan's portfolio. As part of the agreement, Kim Marvin from American Industrial Partners, the majority owner of Carlstar, will join Titan's Board of Directors.
This acquisition is seen as a transformative step for Titan, enabling it to become a "one-stop shop" within the specialty wheel and tire space and expanding its manufacturing and distribution capabilities globally.
The information provided is based on a press release statement from Titan International, Inc.
InvestingPro Insights
Titan International, Inc. (NYSE:TWI) has made a significant strategic move with the acquisition of Carlstar Group LLC, and current financial metrics from InvestingPro show a company that is trading at an attractive valuation. With a market capitalization of $875.74 million and a price-to-earnings (P/E) ratio that has been adjusted for the last twelve months as of Q3 2023 to 7.1, Titan International appears to have a strong investment case. In fact, one of the InvestingPro Tips notes that the company's valuation implies a strong free cash flow yield, which could be a positive signal for investors looking for value in the market.
Another InvestingPro Tip highlights that Titan International is trading at a low earnings multiple, which may appeal to investors seeking undervalued stocks. The company's revenue for the last twelve months as of Q3 2023 stands at $1,941.37 million, although it has seen a decline of 9.59% over that period. Despite facing challenges in sales growth, the company's gross profit margin remains solid at 16.2%, indicating that it retains a level of profitability in its operations.
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