CHICAGO - Oil-Dri Corporation of America (NYSE: ODC), a prominent player in the production of sorbent minerals, has announced a definitive agreement to purchase Ultra Pet Company, Inc., a supplier of silica gel-based crystal cat litter. The transaction, valued at $46 million in cash, is expected to close in Oil-Dri's fourth fiscal quarter of 2024, subject to customary closing conditions.
Oil-Dri plans to fund the acquisition through available cash and existing credit facilities. The company's board of directors and the managers of Ultra Pet’s parent company have unanimously approved the deal. Oil-Dri anticipates the acquisition will be immediately accretive to earnings upon completion.
Ultra Pet, located in Anderson, South Carolina, has been recognized as an innovator in the alternative cat litter market, achieving annual net sales of roughly $24 million. The company, which introduced the first crystal cat litter in the United States in 1998, has since expanded its product line and established a significant presence in the crystal cat litter segment.
With a 500% sales growth in the crystal cat litter segment since 2019, Oil-Dri sees this acquisition as a strategic opportunity to become a more substantial force in this rapidly expanding market.
The addition of Ultra Pet’s branded and private label silica gel-based crystal cat litter products is seen as a natural fit with Oil-Dri’s existing pet care product portfolio. These products are lightweight and provide superior odor control, aligning with Oil-Dri’s strategy to grow the lightweight cat litter segment.
Daniel Jaffee, President and CEO of Oil-Dri, expressed enthusiasm about the expansion into the crystal litter segment, which he believes will strengthen Oil-Dri’s position as a leading cat litter producer in North America.
Christopher Lamson, Group Vice President of Retail and Wholesale at Oil-Dri, also commented on plans to leverage the company’s strong relationships in various retail channels to increase sales of Ultra Pet’s products.
Richard Murbach, CEO of Ultra Pet, noted the acquisition by Oil-Dri would offer incredible opportunities for their crystal cat litter products, citing Oil-Dri’s industry relationships and track record in product development and operational efficiency as catalysts for growth.
This news is based on a press release statement from Oil-Dri Corporation of America.
InvestingPro Insights
As Oil-Dri Corporation of America (NYSE: ODC) makes strategic moves to expand its market share with the acquisition of Ultra Pet Company, Inc., the financial metrics and trends paint a promising picture for investors. With a market capitalization of $505.07 million, Oil-Dri is positioning itself as a significant player in the pet care product industry.
An InvestingPro Tip highlights that Oil-Dri has been trading at a low earnings multiple with a P/E ratio of 11.54, which suggests that the stock could be undervalued relative to its earnings. This is further supported by a slightly lower adjusted P/E ratio for the last twelve months as of Q2 2024, which stands at 10.95.
Another noteworthy InvestingPro Tip is the company's ability to maintain dividend payments for an impressive 50 consecutive years, which speaks to its financial stability and commitment to shareholder returns. This is complemented by a healthy dividend yield of 1.64% as of the latest data.
Investors may also find the revenue growth figures encouraging, with a 13.4% increase in the last twelve months as of Q2 2024, indicating that Oil-Dri is successfully expanding its operations and increasing its market reach.
For those seeking more insights and tips, there are additional InvestingPro Tips available for Oil-Dri at https://www.investing.com/pro/ODC, which could provide further guidance on investment decisions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription and unlock the full potential of your investment strategy with a wealth of expert analysis and data.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.