Carrier (CARR) Sells Chubb to Diversify Resource Allocation
Carrier (CARR) to deepen focus on its core business with the sale of Chubb fire and security business.
Carrier Global Corp. CARR has completed the divestiture of its Chubb fire and security business to deepen its focus on the core areas.
CARR sold Chubb to APi Group Corporation for an enterprise value of $3.1 billion. The deal was announced in July 2021.
The latest move is likely to dampen Carrier’s Chubb-induced fire and security business growth.
Nevertheless, the strategic action offers a scope for diversifying resources to other valuable businesses and projects. Further, it will help Carrier explore and fund various organic and inorganic prospects in the days ahead.
Carrier Global Corporation Price and Consensus
Rationale Behind the Deal
The divestment is expected to boost Carrier’s margin acceleration and aid growth in its free cash flow profile in the near term.
Net proceeds of $2.6 billion from the transaction are currently available with Carrier for capital deployment. Further, an amount worth $750 million will be utilized for debt payment in 2022.
This apart, Chubb’s sale might aid Carrier in further capital allocation this year and beyond.
Additionally, proceeds from the Chubb sale are likely to help Carrier make share repurchases and dividend payments, which in turn, will aid in winning investors’ confidence.
Hence, the latest divestiture is likely to drive business growth in the near term as well as the long haul.
Strategic movements, including acquisitions, partnerships and divestitures have been shaping the growth trajectory of Carrier for a while.
Recently, CARR acquired BrokerBay, a leading developer of premium and user-friendly real-estate management cloud solutions. The buyout added strength to its portfolio of solutions within its fire and security business.
Further, Carrier completed the acquisition of Nlyte Software, a leading company in data center infrastructure management software. With this, CARR fortified its portfolio of data center offerings within the Heating, Ventilation and Air Conditioning (HVAC) business.
Carrier’s Marioff signed an agreement with Rauma Marine Constructions for providing HI-FOG fire protection systems to the Finland navy.
Zacks Rank & Stocks to Consider
Currently, Carrier carries a Zacks Rank #4 (Sell).
Investors interested in the broader technology sector can consider some better-ranked stocks like Advanced Micro Devices AMD, Mimecast Ltd. MIME and Arrow Electronics ARW, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Advanced Micro Devices has gained 51.1% on a year-to-date basis. The long-term earnings growth rate for AMD is currently projected at 46.2%.
Mimecast has gained 39.4% on a year-to-date basis. The long-term earnings growth rate for MIME is currently projected at 35%.
Arrow Electronics has gained 30% on a year-to-date basis. The long-term earnings growth rate for ARW is currently projected at 27.4%.
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