Quotes on shares of protective clothing manufacturer Lakeland Industries rose over 6% on Tuesday, July 2. The company announced the completion of a deal to acquire German competitor LHD Group Deutschland, as well as its subsidiaries in Hong Kong and Australia.
Details
On Tuesday, Lakeland’s shares surged 6.26% on the Nasdaq to $22.39 per share.
Earlier in the day, the company announced that it had completed the acquisition of the fire and rescue business of Germany’s LHD Group Deutschland and its subsidiaries in Hong Kong and Australia (collectively LHD). According to LHD’s website, Lakeland is the sole owner as of July 1.
The deal is valued at approximately $16.3 million. The acquisition enhances Lakeland’s ability to serve clients in Germany and Australia, two of the three largest fire markets in the world, as noted in the press release.
About the companies
Lakeland manufactures and sells protective clothing and accessories through its in-house sales teams and over 2,000 distributors in 50 countries. The company’s customers include the oil, chemical, automotive, transportation, and steel industries, as well as pharmaceutical and high-tech manufacturers, laboratories, and utilities. Lakeland’s products are used by fire and rescue services, law enforcement agencies, the U.S. Department of Defense, and the U.S. Centers for Disease Control. The company posted $124.7 million of net revenue for the fiscal year 2024 (ended January 31), up 10.5% compared to the previous year.
LHD supplies firefighting gear and equipment, with annual revenue of about $27 million, according to Lakeland. The acquisition is expected to allow Lakeland to expand its global presence and enter new market segments. For instance, LHD has a division called LHD Care that maintains protective clothing, including laundry, repair, and sample production. LHD Care is an attractive recurring revenue stream that Lakeland plans to expand, it says. In addition to clothing, LHD’s fire and rescue product line includes gear and technical equipment.
With the integration of LHD Group, Lakeland expects revenue in a range of $160-170 million for the fiscal year 2025, with adjusted EBITDA of $18.0-21.5 million. The previous guidance was $140-150 million of revenue and adjusted EBITDA of $16.8-18.5 million.
Analyst insights
Over the last 12 months, Lakeland’s stock has climbed nearly 56%. According to MarketWatch, two analysts cover the company. They recommend buying the stock, with an average target price of $26 per share, indicating upside of 16% from the July 2 close. Simply Wall St analysts put the fair value of Lakeland shares at $34.46, more than 50% above the current share price.
