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American Vanguard (AVD) Announces Closure of OHP Acquisition

Zacks Equity Research
Updated

American Vanguard Corporation AVD announced the completion of the acquisition of OHP, Inc., a leading technology-based pesticide solutions provider for nursery and greenhouse production applications. The buyout will increase the company’s non-crop business by roughly 50%. However, the company has not disclosed the terms of the deal.

American Vanguard, last month, declared that its wholly-owned subsidiary, AMVAC Chemical Corporation, will acquire OHP, which markets its products using a network of leading distribution partners throughout the United States and Puerto Rico.

According to American Vanguard, OHP will continue to operate in horticultural markets and use OHP brands under the current general manager and veteran leader, Dan Stahl. Also, the OHP team will continue to sell its current portfolio and services. Key partners, technology providers and existing customers of OHP have expressed their support toward this new alignment.

OHP’s business model, entrepreneurial culture and strategy is very similar to AMVAC, per the chief operating officer of AMVAC, Bob Trogele. The deal makes OHP a significant part of AMVAC’s non-crop business. Further, the OHP team brings onboard unparalleled customer service and high quality products, complementing the company’s growing ornamental, turf and pest control business. Annual sales of OHP have been in the range of $20-$25 million in recent years and moving forward, American Vanguard expects to build up on that foundation.

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Shares of American Vanguard have moved up 41.1% in the last three months, significantly outperforming the industry’s 1.4% growth.

 

 

American Vanguard, during second-quarter earnings call, announced that outlook for the balance of 2017 is positive. The company noted that significant increase in cotton acreage in the United States will lead to increased sales of Bidrin foliar insecticides and Folex harvest defoliants in the second half of 2017.

American Vanguard also expects modest international growth and a rebound in soil fumigant business. Moreover, the company expects continued demand for its Dibrom mosquito adulticide. The company also remains focused on managing working capital and operational costs and investing in technology innovation for future growth.

American Vanguard Corporation Price and Consensus

 

American Vanguard Corporation Price and Consensus | American Vanguard Corporation Quote

Zacks Rank & Stocks to Consider

American Vanguard currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Sociedad Quimica y Minera de Chile S.A. SQM, The Chemours Company CC and FMC Corporation FMC. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Sociedad Quimica has an expected long-term earnings growth rate of 32.5%.

Chemours has an expected long-term earnings growth rate of 15.5%.

FMC Corporation has an expected long-term earnings growth rate of 11.3%.

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