Genuine Parts to Acquire Kaman Distribution Group for $1.3B; Shares Rise

Global service organization Genuine Parts Co. (GPC) has signed an agreement to acquire Connecticut-based Kaman Distribution Group (KDG) for approximately $1.3 billion in cash. Motion Industries, a subsidiary of GPC, will acquire KDG from investment firm Littlejohn & Co.

Following the announcement on Thursday, shares of GPC rose 2.3% to close at $136.01. The stock gained another 0.4% in the after-hours trading session to end the day at $136.56.

The company distributes automotive replacement parts, industrial replacement parts, office products and electrical/electronic materials.

About KDG

Kaman Distribution provides power transmission, automation and fluid power industrial distributor services and solutions across the U.S. It supplies electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components to MRO and OEM customers.

The company expects to generate revenue of around $1.1 billion next year.

Strategic Impact of the Deal

Genuine Parts expects the acquisition to contribute to its adjusted EPS within the first year of closing, which is expected in the first quarter of 2022. Further, it anticipates achieving annual synergies of more than $50 million over the next three years

CEO Comments

Commenting on the deal, GPC’s Chairman and CEO, Paul Donahue, said, “Motion’s highly synergistic acquisition of KDG significantly enhances our scale and further strengthens our market-leading position. In addition, this combination creates opportunities for accelerated long-term growth, profitability and cash flow.”

Analyst Ratings

Overall, the stock has a Moderate Sell consensus rating based on 2 Holds and 1 Sell. The average Genuine Parts Co. price target of $136.33 implies 0.2% upside potential. Shares have gained 40.3% over the past year.