Breville Group Ltd (ASX: BRG) shares are up on news of a US acquisition called Baratza which is a premium coffee grinder business.
Breville, with a market cap of $3.5 billion, sells a variety of home appliances like toaster, coffee machines and so on.
Breville’s US acquisition
It has announced that it has acquired Seattle business Baratza.
Baratza was established in 1999, it designs and sells premium coffee grinders for North American and international markets.
Management like the acquisition because it brings together two of the world’s leading companies when it comes to coffee products.
Breville has bought Baratza on a cash and debt free basis for approximately US$60 million. Around US$43 million was paid in cash (from existing cash reserves) and the other US$17 million was from issuing 884,956 shares which are subject to a 3-year trading lock.
Breville CEO Jim Clayton said: “We are excited by the opportunity to bring Baratza into the Breville family. Our combined experience will unlock dynamic revenue synergies for both businesses, that share a passion for innovation and an unwavering commitment to enhancing the consumer experience.”
Summary
A $US60 million acquisition is pretty big, though not that material for the overall Breville business. I think Breville is a quality industrial ASX share, it’s done very well over the years.
But it’s hard to say how much potential growth there is. As good as the business is, I’m not sure I could invest in a business where the opportunity size is not clear and there’s also plenty of competition. That’s why I would prefer to invest in other ASX growth shares like Pushpay Holdings Ltd (ASX: PPH).
