RPM International Inc. (RPM – Free Report) has signed a definitive agreement to acquire the UK-based Star Brands Group, mostly known for the globally renowned The Pink Stuff product.
RPM stock dropped 4.2% during Thursday’s trading session and inched down 1% in the after-hours, following the buyout agreement announcement.
More About RPM’s New Buyout
RPM International is engaging in this strategic transaction with Star Brands to enhance and diversify its Rust-Oleum subsidiary’s cleaners business. The addition of the acquired company to the portfolio will expand and strengthen RPM’s position across multiple channels, including e-commerce, grocery and drug stores.
The acquisition is expected to close in the latter half of the fourth quarter of fiscal 2025 or the early first quarter of fiscal 2026, after the satisfaction of customary closing conditions. Upon the completion of the transaction, Star Brands will operate under RPM International’s Consumer Group segment.
Per Frank C. Sullivan, RPM chairman and CEO, “The Pink Stuff will strengthen our presence and scale in multiple sales channels, and, thanks to improvements we have made through our MAP 2025 program, we are well-positioned to support the brand’s growth globally.”
RPM International’s Inorganic Initiatives Enhance Prospects
Acquisitions and divestitures have been an important part of RPM International’s growth strategy. Strategic buyouts are mainly aimed at enhancing brand portfolios, expanding market reach, increasing innovation aspects and ensuring profitability. In the second quarter of fiscal 2025, the company acquired TMP Convert SAS to enhance its decking and landscaping product range.
Moreover, RPM regularly divests its less profitable and underperforming businesses to focus on its core areas to accelerate growth and improve shareholder value. In the first quarter of fiscal 2024, the company divested USL’s Bridgecare services division.
These initiatives align with RPM’s MAP 2025 operational improvement initiative, which focuses on accelerating growth, maximizing operational efficiencies and generating superior value for its customers, associates and shareholders.
Image Source: Zacks Investment Research
Shares of this high-performance coatings, sealants and specialty chemicals manufacturer and marketer have tumbled 8.6% in the past three months against the Zacks Chemical – Specialty industry’s 3.6% growth. Although increased cost structure and foreign currency woes are concerning to the prospects, the efficient execution of the MAP 2025 initiatives, along with accretive inorganic and organic strategies, bodes well for the upcoming period.
RPM’s Zacks Rank & Key Picks
RPM International currently carries a Zacks Rank #4 (Sell).
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