Transaction Adds Leading Speciality
Manufacturer of Essential Products Serving the Commercial
Transportation, HVAC and Office Markets to Acacia’s Growing
Portfolio
Expected to Deliver Significant Revenue and be
Immediately Accretive to Free Cash Flow and Earnings Per Share with
Further Value Creation Opportunities
Deflecto Expected to Generate Approximately
$128-$136 Million in Revenue in 2024
Acacia Research Corporation (Nasdaq: ACTG) (“Acacia” or
the “Company”), which acquires and operates businesses
across the industrial, energy and technology sectors, announced
today that is has acquired Deflecto Acquisition, Inc.
(“Deflecto”) for $103.7 million (the “Transaction”).
Headquartered in Indianapolis, Indiana, Deflecto is a leading
specialty manufacturer of essential products serving the commercial
transportation, HVAC and office markets. Under Acacia’s ownership,
Deflecto will continue to be led by Ross Pliska, Chief Executive
Officer, and the existing Deflecto management team.
Deflecto is a market leader across each of its segments and end
markets, supplying essential, regulatory mandated products to a
blue-chip customer base via long-term relationships with more than
1,500 leading retail, wholesale and OEM customers and distribution
partners globally. Its products include emergency warning triangles
and vehicle mudguards used by the transportation industry, various
airducts and air registers used by the HVAC market and literature,
sign holders and floormats used by the office market. Deflecto
manufactures its products at nine manufacturing facilities across
the United States, Canada, the United Kingdom and China.
In the trailing twelve-month period ended August 31, 2024,
Deflecto generated revenue of approximately $131 million. Based on
current market conditions and trends, Acacia expects Deflecto to
generate approximately $128-$136 million in revenue in 2024.
Martin (“MJ”) D. McNulty, Jr., Acacia’s Chief Executive Officer,
commented:
“We are pleased to add Deflecto to Acacia’s growing portfolio of
strategic assets. This acquisition is consistent with the types of
opportunities we look for. Deflecto fits in our target size range,
sells diversified and necessary goods and has an excellent
management team, led by Ross, with a demonstrated track record of
operational execution and capital allocation.
With attractive cash conversion characteristics, modest capital
requirements and attractive value creation opportunities we are
pleased to add Deflecto as a key business to our growing portfolio.
The transaction is expected to deliver immediate and significant
revenue to Acacia and be accretive to free cash flow and earnings
per share. We believe Deflecto presents attractive near and
long-term term value creation opportunities through product and
operational optimization, as well as strategic M&A.”
Ross Pliska, Deflecto’s Chief Executive Officer, commented:
“The transaction with Acacia is a seamless fit and the
culmination of Deflecto’s efforts since 2021 to significantly
improve Deflecto’s financial and operational performance across the
business. Acacia’s experienced management team has a history of
successfully integrating acquisitions and offers industry
expertise, additional capital for future investments and immediate
value creation. We can’t wait to start working with MJ and the rest
of the Acacia team.”
The Transaction was funded utilizing cash on hand and borrowings
under a new senior secured credit facility (the “Facility”)
guaranteed by certain subsidiaries of Deflecto. JPMorgan Chase is
acting as the lead arranger and administrative agent under the
Facility, and the Facility is syndicated among other financial
institutions. Following distribution of the Transaction proceeds,
Deflecto will have approximately $48 million outstanding under the
Facility and $10 million of cash on hand. For more information, see
the Company’s 8-K filed today with the U.S. Securities and Exchange
Commission (the “SEC”).
Advisors
Baker Botts acted as legal advisor and Deloitte acted as
financial advisor to Acacia on the Transaction. Vedder Price acted
as legal advisor and TD Cowen, a division of TD Securities, acted
as financial advisor to Deflecto on the Transaction.
About Acacia
Acacia is a publicly traded (Nasdaq: ACTG) company that is
focused on acquiring and operating attractive businesses across the
mature technology, energy, and industrial/manufacturing sectors
where it believes it can leverage its expertise, significant
capital base, and deep industry relationships to drive value.
Acacia evaluates opportunities based on the attractiveness of the
underlying cash flows, without regard to a specific investment
horizon. Acacia operates its businesses based on three key
principles of people, process and performance and has built a
management team with demonstrated expertise in research,
transactions and execution, and operations and management.
Additional information about Acacia and its subsidiaries is
available at www.acaciaresearch.com.
About Deflecto®
Deflecto and its family of companies make life essential
products. Headquartered in Indianapolis, Indiana with more than 60
years of innovation, Deflecto is one of the world's largest
manufacturers of floor protection and bicycle reflectors and is a
global leader in office, storage and craft solutions,
transportation, dryer venting and air distribution products. For
more on Deflecto's portfolio of products, please visit
http://www.deflecto.com.
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These statements are based upon Acacia’s current expectations and
speak only as of the date hereof. All statements, other than
statements of historical fact are forward-looking statements. Words
such as “anticipate,” “believe,” “continue,” “could,” “estimate,”
“expect,” “forecast,” “future,” “guidance,” “intend,” “may,”
“opportunity,” “outlook,” “plan,” “positioned,” “project,” “seek,”
“should,” “target,” “will,” “would,” or similar words may be used
to identify forward-looking statements; however, the absence of
these words does not mean that the statements are not
forward-looking. While Acacia believes its assumptions concerning
future events are reasonable, a number of factors could cause
actual results to differ materially from those projected,
including, but not limited to: any inability to retain employees
and management team(s) at Deflecto; any inability to successfully
integrate Deflecto; facts that were not revealed in the due
diligence process in connection with acquisition of Deflecto;
disruptions or uncertainty caused by changes to Deflecto’s
management team; Deflecto’s future results of operations,
inflationary pressures, supply chain disruptions or labor
shortages; non-performance by third parties of contractual or legal
obligations; changes in the Company’s credit ratings; hazards such
as weather conditions, a health pandemic (similar to COVID-19),
acts of war or terrorist acts and the government or military
response thereto; security threats, including cybersecurity threats
and disruptions to the Company’s business and operations from
breaches of information technology systems, or breaches of
information technology systems, facilities and infrastructure of
third parties with which the Company transacts business; changes in
safety, health, environmental, tax and other regulations,
requirements or initiatives; and unknown operating and economic
factors that could cause actual results to differ materially from
those anticipated or implied in the forward-looking statements. For
further discussions of risks and uncertainties, you should refer to
Acacia’s filings with the Securities and Exchange Commission,
including the “Risk Factors” section of Acacia’s most recent Annual
Report on Form 10-K and any subsequent Quarterly Reports on Form
10-Q. Acacia undertakes no obligation to update or revise any
forward-looking statements to reflect events or circumstances
occurring after the date of this new release, except as required by
law. You are cautioned not to place undue reliance on any
forward-looking statements, which speak only as of the date of this
news release. All forward-looking statements are qualified in their
entirety by this cautionary statement.
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version on businesswire.com: https://www.businesswire.com/news/home/20241021690083/en/
Investor Contact: Gagnier Communications ir@acaciares.com
Derek Sarsfield, CHRO Derek.Sarsfield@deflecto.com
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