Organic ingredients manufacturer Darling Ingredients Inc. (NYSE: DAR) recently announced that it has entered into a definitive agreement to acquire used cooking oil facilities operator Valley Proteins, Inc. for roughly $1.1 billion in cash.
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Strategic Impact
With this buyout, Darling Ingredients is expected gain a strong foothold in southern, southeast and mid-Atlantic areas of the U.S, as Valley Proteins is one of the leading players of the used cooking facilities space in the region with about 1,900 employees and a fleet of 550 vehicles.
Management Commentary
The CEO of Darling Ingredients, Randall C. Stuewe, said, “We are pleased to add Valley Proteins to our global ingredient family and we expect this acquisition to be accretive post integration. In the evolving world of ESG and global decarbonization, Valley Proteins will supplement Darling’s global supply of waste fats and greases. The new supply will now provide Darling with additional low carbon feedstock to produce renewable diesel and potentially sustainable aviation fuel.”
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Price Target
Recently, Kansas City Capital analyst Tyson Bauer upgraded the stock to Buy from Hold with a price target of $75, which implies upside potential of 12.8% from current levels.
Overall, the stock has a Strong Buy consensus rating based on 7 unanimous Buys. The average Darling Ingredients stock price prediction of $92.29 implies upside potential of 38.7% from current levels. Shares have gained 18.2% over the past year.
Hedge Funds’ Confidence
TipRanks’ Hedge Fund Trading Activity tool shows that hedge fund confidence in Darling Ingredients is currently Very Positive. Moreover, the cumulative change in holdings across all 9 hedge funds that were active in the last quarter was an increase of 1.6 million shares.
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