A few quotes from recent Colorpak announcements regarding the CHH acquisition - and a few of my thoughts
"a defining event for our company and catapults us into a leading industry position". Not seeing a lot of catapult action in the share price - it has gone from lows 50s to 60 cents. A special thanks to those sellers.
"Transaction is still expected to be over 10% EPS accretive, based on cost synergies alone, in the first full year following acquisition, on a normalised basis". They are forecasting a jump in revenue from 80 to 210 million as a result of this deal. Now I'm pretty sure they are not doing this for an additional 10% in profit. With the Colorpak management team doing their stuff I think we're looking at a very sizeable profit increase over the next 2 to 3 years.
"working with customers to drive commercially sustainable outcomes with product and service" . The words "commercially sustainable" really stand out to me. CHH has been the biggest player in this market and has not been making a profit. Now they have either been inefficient and/or they have been selling their product too cheaply - or maybe they are making all the profit on the cardboard.
For such a boring business the next few years are going to be pretty exciting.
CKL Price at posting:
60.0¢ Sentiment: Buy Disclosure: Held
