The “Return to Craft” strategy has been well executed. The Matsos acquisition accelerates this process by adding well-known brands to a stable of strongly growing Gage products. The purchase price, at ~7x incremental EBITDA is attractive, and although largely funded by up to $12m in new equity at $0.085, we see EPS accretion close to 30% in FY19. Our blended valuation climbs to $0.100 (prior $0.090), however with strong momentum we introduce a target price of $0.117 (blended valuation 1-year out). Although the price is up nearly 25% on the placement and SPP price, there is still upside. BUY maintained.
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