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AZZ to Divest Majority Stake in Infrastructure Solutions

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AZZ Inc. AZZ announced a definitive agreement with Fernweh Group LLC per which the former will sell 60% of its interest in AZZ Infrastructure Solutions Segment (“AIS”), to the latter for nearly $228 million. The above transaction is expected to close by the end of this year, subject to necessary approval and permission.

AIS will continue to provide specialized products and solutions, designed to support industrial and electrical applications. Fernweh management is expected to provide the much-needed impetus for further growth of AIS, after a strong year of bookings and backlog growth.

Rationale Behind Divestiture

AZZ through its minority stake in AIS, will be able to participate in AIS' value-creation journey, as it strengthens its position in an attractive marketplace for its specialized products and services.

AZZ’s decision to divest the majority stake of AIS to Fernweh is a strategic move that will allow AZZ to fully concentrate on providing metal coating and galvanizing solutions to its customers. The deal will improve the near-term liquidity of AZZ.

Per a Market Data Forecast report, the metal coating market is expected to reach $15.48 billion in 2026 from $12.29 billion in 2021.  This provider of hot-dip galvanizing solution will benefit from favorable trends in end markets, including a broader set of customers, converting from post-fabrication wet-spray paint to galvanizing, for superior corrosion protection. AZZ, with its focus on metal coating and galvanizing solution, will be able to capitalize on improving demand, globally.

Zacks Rank & Other Picks

AZZ currently sports a Zacks Rank#1 (Strong Buy).  Other top picks from the same space are Energous WATT, The LGL Group LGL and Regal Beloit RRX, each currently having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for 2022 earnings of Energous, The LGL Group and Regal Beloit has moved up 17.9%, 107.1% and 12.2%, respectively.

Price Performance

Energous, AZZ, The LGL Group and Regal Beloit’s shares have returned better than its industry in the past month.


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Zacks Investment Research

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