BMO Capital raised its price target on Multi-Color to $88 from $80, reiterating a market perform rating after the company announced its plan to acquire Constantia Labels, a division of European packaging company Constantia Flexibles.”The deal seems complementary, with limited product or geographic overlap, and extends LABL’s portfolio. Constantia provides a large presence in food & beverage labels and diversifies LABL’s European business beyond wine and spirits,” BMO said. “It also expands LABL’s Asian presence.”
It noted that the multiple is “full” at around 10.25x 2017E EBITDA, and that limited overlap means few synergies, but said the deal builds scale and extends the company’s reach. BMO said it remains cautious as the company is facing a large integration and has also had a number of recent operational challenges.