STAMFORD, Conn. - Star Group, L.P. (NYSE:SGU), a prominent home energy distributor and service provider with a market capitalization of $407 million, has announced a definitive agreement to acquire a local home energy distributor for approximately $68 million, excluding working capital adjustments. The transaction, which is expected to further solidify Star's competitive position, is slated to close within the next 45 days, pending regulatory approvals. According to InvestingPro analysis, the company currently trades below its Fair Value, suggesting potential upside for investors.
Jeff Woosnam, President and CEO of Star Group, expressed confidence in the acquisition, stating that it is poised to be a strategic investment benefiting both the company and its shareholders. The target company, which operates within Star's current service regions, is anticipated to enhance Star's market presence.
Star Group, recognized as one of the nation's largest retail distributors of home heating oil by sales volume, provides an array of services including the sale and servicing of heating and air conditioning equipment. The company's customer base extends to residential and commercial sectors in the Northeast and Mid-Atlantic regions of the United States, where it also offers diesel, gasoline, and home heating oil delivery.
This expansion move comes amidst a backdrop of various risks and uncertainties identified by the company, which could potentially impact the future performance and operations. These include geopolitical events affecting product costs, supply and demand dynamics, inflation levels, customer consumption patterns, weather conditions, litigation, regulatory changes, labor relations, and technological advancements.
The company's forward-looking statements, which include projections and expectations of future events, are subject to these risks and uncertainties. Star Group has cautioned that actual results may significantly differ from those projected due to these factors.
The acquisition is part of Star's ongoing strategy to grow its customer base and enhance service offerings. As the company navigates a complex market landscape, this latest development is based on a press release statement and reflects the company's proactive approach to strengthening its market position through strategic investments.
In other recent news, Star Group L.P. has made amendments to its credit agreement with a consortium of ten banks, extending the deadlines related to a crucial acquisition for the company's expansion strategy. While the specifics of the acquisition have not been disclosed, it indicates Star Group's intent to maintain financial flexibility for its growth initiatives. The company's financial health remains solid, with a total debt of $304.56 million and EBITDA of $88.02 million.
Simultaneously, Star Gas Partners LP, a part of Star Group, reported its fourth-quarter financial results for fiscal 2024. The company's total revenue saw a minor decline year-over-year, but its adjusted EBITDA and net income increased significantly. The company's product gross profit for Q4 rose by $4 million (10%) to $42 million, while the full-year product gross profit increased by $21 million (5%) to $468 million.
In the same period, Star Gas Partners completed five acquisitions, adding 20,000 customers to its base. Despite warmer than usual weather affecting heating oil and propane volumes, the company's management remains optimistic about future growth. The company is preparing for the upcoming heating season and focusing on acquisitions and customer retention, backed by a strong acquisition pipeline. Recent developments indicate that Star Group and its affiliates are actively managing their financial and strategic operations to support growth.
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