Steel manufacturing company Nucor Corporation (NUE) announced that it has entered into an agreement to acquire pallet rack and steel tube manufacturer Hannibal Industries for $370 million.
Following the news, shares of the company appreciated 1.6% in Wednesday’s trading session and closed at $91.80 in the extended trading session.
With this buyout, Nucor will gain access to Hannibal’s expertise in the racking business. Further, Hannibal’s utilization of sheet and bar steel to manufacture its racking products is expected to result in supply chain efficiencies with other Nucor businesses.
The Executive Vice-President of Sheet and Tubular Products at Nucor, Rex Query, said, “Acquiring Hannibal Industries further deepens our ability to serve warehouse and distribution customers when coupled with our pending purchase of Cornerstone Building Brands’ insulated metal panels business.” (See Nucor stock chart on TipRanks)
Recently, Deutsche Bank analyst Chris Terry reiterated a Hold rating on the stock. The analyst, however, raised the price target from $75 to $100 (9.3% upside potential from current levels).
The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus based on 2 Buys and 6 Holds. The average Nucor price target of $106.25 implies that the stock has upside potential of 16.1% from current levels. Shares have gained about 118.5% over the past year.
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