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Technology Stocks : Thiokol now Cordant Techologies (CDD)
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To: Carmine Cammarosano who wrote (121)9/11/1999 12:30:00 PM
From: Carmine Cammarosano  Read Replies (1) of 127
 
Summary

Cordant announced plans to acquire the Continental/Midland Group of companies
(about $81 million in annual sales), manufacturers of highly engineered
fasteners and fastener systems primarily for the automotive industry.
Proforma annual sales at Huck Industrial are now about $400 million.

At first blush, we believe the acquisition will make a good fit with Huck's
existing industrial businesses. In addition, the acquisition should help
solidify Huck's relationship with important customer Ford Motor Company -
Continental/Midland is well-positioned as a Tier I supplier to Ford (about 50
% of its sales).

We believe operating margins at Continental/Midland are in the 12-13% range,
below the 15-16% currently realized at Huck Industrial. However, we believe
these margins can move toward the mid-teens over time as Huck management
moves to implement its lean manufacturing techniques.

The acquisition is expected to close by the end of 1999. Management expects
Continental/Midland to be "slightly accretive" to earnings in 2000.

We believe Cordant will continue to look for niche acquisition opportunities,
particularly in fasteners, in both the U.S. and Europe. In addition, we
still believe that the company will acquire the rest of Howmet over the next
12-18 months.

We are keeping our EPS estimates at $4.18 for 1999 and $4.45 for 2000. We
continue to rate Cordant a Strong Buy with a $62 price target.

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