Q: Thoughts on Corby's acquisition and with the downward trajectory the past year, is sub $14 looking like a good risk/reward?
5i Research Answer:
The $148M purchase is aggressive for a company with a market cap of ~$400M. But it adds products, diversifies the business, adds 35% to revenue and is accretive to margins. With CSW in slow-growth mode, something needed to be done and it has the financial capacity. The ready-to-drink category is growing. We think it makes sense. The stock we think is OK and priced well but with weak momentum we think buyers have some time here.