Compass Diversified Holdings (NYSE:CODI) is one of the small cap stocks that make up 0.28% of George Soros stock portfolio.
On March 30, Compass Diversified Holdings (NYSE:CODI) announced that it had agreed to sell the food service business of its subsidiary Sterno. Compass Diversified is selling the business to Archer Foodservice Partners, and the deal is valued at $292.5 million.
Compass Diversified acquired Sterno in 2014 for around $163 million. The food service business being sold generated around $30.3 million in adjusted EBITDA for Sterno. Sterno also has a home fragrance business, which Compass Diversified has retained. The home fragrance business operates under the Rimports brand and is based in Provo, Utah. This business manufactures and distributes home fragrance products in both branded and private-label options.
If all goes well, Compass Diversified expects to close the sale of Sterno’s food service business in May 2026. The company plans to use proceeds from this transaction to clean up its balance sheet by repaying outstanding debt. Following the anticipated debt repayment, Compass Diversified expects its net leverage ratio on senior secured debt to drop below 1.0x.
On March 19, William Blair reiterated its Outperform rating on Compass Diversified Holdings (NYSE:CODI) stock, noting that the stock was undervalued. William Blair analysts pointed out that asset sale and leverage improvement would provide tailwinds for Compass Diversified stock.
Moreover, the analysts see the company using capital for share repurchases as leverage is reduced. Compass Diversified suspended its common shareholder distribution program last year to allow it to strengthen its financial position.
Compass Diversified Holdings (NYSE:CODI) is a private equity firm. It acquires controlling stakes in profitable businesses in diverse sectors and prefers to invest in North American companies. It usually holds investments for between five and seven years. Compass Diversified has been around since 1998 and has its headquarters in Westport, Connecticut.
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