Luxfer To Acquire U.S.-Based Truetech And Innotech - Analyst Blog

Machinery company Luxfer Holdings PLC LXFR recently entered into an agreement to buy two U.S.-based companies, Truetech, Inc. and Innotech Products, Ltd., both owned by a single parent company. The purchase consideration is valued at $64 million, which translates to 8x the expected earnings before interest, taxes, depreciation and amortization (EBITDA) for 2014.

Truetech and Innotech provide magnesium-based heating pads for self-heating meals mainly used by the U.S. military and emergency relief agencies. These companies also produce chemical agent detection and decontamination kits, seawater desalinization kits, self-heating meals, beverages and soups used by military and civilian end-users.

This acquisition is in line with Luxfer's strategy of expanding its ‘Protection' technology. Following the completion of the deal, both companies will become part of the Luxfer Magtech Inc. (LMI), and operate under Luxfer Group's Elektron Division.

These companies manifest a revolution in themselves. Truetech manufactures Flameless Ration Heater which generates heat without the use of flame or electricity. When the magnesium-iron heater pad comes in contact with water, it generates energy capable of heating a pre-cooked meal in roughly 10 minutes.

Both the companies cater predominantly to the U.S. armed forces. However, they also offer products like snacks, desserts and juices to the civilians, along with manufacture of self-heating beverage kits for making hot coffee, tea, cocoa and soups.

With a market capitalization of $503.8 million, Luxfer holds a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Gorman-Rupp Co. GRC, Blount International Inc. BLT and Illinois Tool Works Inc. ITW. While Gorman-Rupp sports a Zacks Rank #1 (Strong Buy), Blount International and Illinois Tool Works hold a Zacks Rank #2 (Buy).

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