Canadian multinational electronics manufacturing services company Celestica (CLS) has entered into an all-cash deal worth $306 million to acquire PCI Limited from Platinum Equity. The transaction, which is subject to necessary approvals, is expected to close in the fourth quarter of 2021.
With this acquisition, Celestica’s engineering-focused engagements, including full product development in the areas of telematics, human machine interface (HMI), IoT and embedded systems are expected to be bolstered. (See Celestica stock charts on TipRanks)
The acquisition will add over 20 complementary, blue-chip customers to Celestica’s customer base and lead to multiple synergies, including commercial cross-selling opportunities between both companies, acceleration of engineering product offerings and supply chain savings.
Notably, the deal is expected to be accretive to adjusted EPS in the first year with returns anticipated to exceed Celestica’s cost of capital by the second year or sooner.
The President and CEO of Celestica, Rob Mionis, said, “This acquisition is intended to help us to further diversify our customer base and expand our ATS portfolio with high-growth programs.PCI is also expected to add strong annual revenue and cash flow generation that enhances our financial profile and outlook for 2022 and beyond.”
Two months ago, BMO Capital analyst Thanos Moschopoulos maintained a Hold rating on Celestica with a price target of $10 (24.2% upside potential).
Based on 1 Buy and 3 Holds, the stock has a Hold consensus rating. The average Celestica price target of $10.06 implies 25% upside potential from current levels.
TipRanks data shows that financial blogger opinions are 100% Bullish on CLS, compared to the sector average of 72%.
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