Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

AK Steel (AKS) to Buy Precision Partners for $360 Million

AK Steel AKS has agreed to purchase Precision Partners Holding Company for $360 million in cash. The transaction, which is subject to customary closing and regulatory approvals in the U.S. and Canada, is expected to complete in third-quarter 2017.

Ontario-based Precision Partners is a leading North American automotive market company that offers engineering, tooling, die design and hot and cold stamped steel parts. The entity employs over 1,000 employees across eight plants in Ontario, Alabama and Kentucky and has a highly experienced leadership team.

AK Steel plans to fund the acquisition with debt and equity securities. Credit Suisse is serving as financial advisor to AK Steel on the deal.

The deal combines the steel maker’s innovation in materials and metals-forming and Precision Partners' tooling and stamping technology and advanced capabilities.

The buyout is in sync with AK Steel's commitment to broaden its portfolio of high-value products and processes and also advances the company’s focus on the rapidly growing automotive lightweighting industry and its position in advanced high strength steels. It also reinforces collaboration with the company’s automotive market customers.

AK Steel has outperformed the Zacks categorized Steel-Producers industry over a year. The company's shares have rallied 39.3% during the period while the industry saw a gain of about 35.7%.


AK Steel remains focused on expanding its core automotive business. The company gets a large chunk of its sales from the automotive sector.

AK Steel is also laying importance on de-emphasizing commoditized products and launching new value-added products. As part of this strategy, the company, last year, launched Nexmet – an innovative product range of high-strength steel for use in automotive lightweighting applications. The products are expected to greatly benefit automotive manufacturers and reinstate the company’s focus on innovation and technology for product development.

The company also remains committed to reduce cost amid a persistent challenging operating environment. It is looking for cost saving opportunities in 2017 through a number of means including process improvement, headcount cuts, reduction in process time and procurement activities.

AK Steel currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-placed companies in the basic materials space include Ternium S.A. TX, The Chemours Company CC and Kronos Worldwide, Inc. KRO, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ternium has an expected long-term earnings growth of 18.4%.

Chemours has an expected long-term earnings growth of 15.5%.

Kronos has an expected earnings growth of 354.8% for the current year.

Today's Stocks from Zacks' Hottest Strategies  

 It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively. 

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>
 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Kronos Worldwide Inc (KRO): Free Stock Analysis Report
 
Chemours Company (The) (CC): Free Stock Analysis Report
 
AK Steel Holding Corporation (AKS): Free Stock Analysis Report
 
Ternium S.A. (TX): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research