This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Armored AutoGroup Eyes Next Steps After IDQ Buy

Stocks in this article: JAH CHD

NEW YORK (The Deal) -- Armored AutoGroup, the Danbury, Conn.-based maker of automotive cleaners and fuel additives, is considering a number of options, including an initial public offering or sale, according to its chief executive.

CEO Michael Klein said, after a company presentation at the Jefferies' consumer and retail conference in Nantucket, Mass., Thursday, that Armored is moving forward with the integration of IDQ Holdings Inc., which makes vehicle air-conditioning do-it-yourself recharge products, that it acquired about three months ago for undisclosed terms.

With IDQ adding another $10 million a year in additional Ebitda through synergies-in total, $137 million over the past 12 months for the combined companies-Klein said Armored's options are many. He added that adjusted Ebitda was $122 million for the combined companies.

Most of the synergies are being realized between the two companies because Armored and IDQ had relationships with different groups of retailers and can cross-sell their products. Armored also has a large international presence, which will be key to increasing IDQ product sales as it had minimal presence outside of the U.S.

Klein said the company had been receiving financial advice from investment bank Jefferies LLC, while its PE sponsor Avista Capital Partners LP had used J.P. Morgan & Co. as its financial adviser.

Armored was acquired from Clorox by Avista in 2010 for $780 million.

PE firm Kinderhook Partners LP, which owned IDQ, also continues to hold a substantial stake in Armored AutoGroup following the merger, Klein noted.

Klein said it was a bit early for an IPO, even though it is an option. A sale to consumer conglomerates like Jarden (JAH - Get Report) or a Church & Dwight (CHD - Get Report), would be attractive as well, and could happen quickly depending on the offer, he agreed. Klein added the caveat that the company is under no pressure to sell.

Both Jarden and Church & Dwight have previously voiced an interest in entering consumer categories via acquisitions if the target holds a dominant position in that segment.

Armored AutoGroup makes consumer products in several categories that hold the number one or two position in terms of market share. Market leaders include its ArmorAll product in auto care appearance. STP holds the number two position in the performance chemicals category, behind Lucas Oil Products Inc. And IDQ is the leader in air-conditioning recharge products.

Other options for the company include refinancing debt, as its bonds trade at an all time high, Klein said, as well as pruning the portfolio through divestitures or making acquisitions.

One attractive acquisition could be that of Old World Industries LLC, the Northbrook, Ill.-based leader in the anti-freeze space. Klein said it would be good to have an off-cycle winter business to balance out its summer-related air-conditioning recharge business.

Old World Industries did not immediately respond to requests for comment.

Other attractive acquisitions are of distributors, particularly for its IDQ product, which requires people who can train retailers and consumers how to use the products.

Before the merger, Armored had revenue of nearly $290 million for the fiscal year ended Dec. 31 and long-term debt of about $544 million, according to regulatory filings.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,191.37 -195.84 -1.13%
S&P 500 2,002.16 -27.39 -1.35%
NASDAQ 4,637.9940 -43.5030 -0.93%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs