Revolution Lighting Technologies Inc. Surges 15% on Acquisition Agreement

What: Revolution Lighting Technologies  (NASDAQ: RVLT  ) soared more than 25% in early trading today, before settling down for a 16% gain by midafternoon, on news about its agreement to acquire Value Lighting and select affiliates.

Value Lighting is a leading supplier of lighting solutions to the residential housing sector and new construction marketplace in the U.S., with 2013 revenue of roughly $43 million. Revenue is expected to rise to nearly $55 million this year.

The deal calls for Revolution Lighting to pay a total purchase price tag of $35.6 million for 100% of the outstanding equity of Value Lighting's business and $3.5 million of assumed debt. According to a press release from Revolution Lighting, approximately $7.5 million of the price tag will be paid in cash, with the remaining $28.1 million to be paid in Revolution Lighting common stock.

So what: The market likes the acquisition, which seems to be a sound move for Revolution Lighting that will enable the company to penetrate new markets and will accelerate overall growth.

"Value Lighting's existing and new build customers are seeking to expand into LED lighting solutions and will provide a new and significant distribution channel for our company." Revolution Lighting Technologies Chairman and CEO Robert LaPenta said in a press release.

In addition to the incremental growth opportunity in its LED lighting solutions business, this acquisition gives Revolution Lighting a foothold into multifamily construction -- such as apartments and condominiums -- which has posted strong growth in recent years.

Now what: This is a continuation of the acquisition trend seen in 2013 as Revolution Lighting purchased Relume Technologies, CMG Energy Solutions, and Tri-State LED. The million-dollar question is whether this acquisition makes Revolution Lighting a stock to buy.

I'm not convinced it does yet. This acquisition will enable Revolution Lighting to expand and grow, but LED lighting remains a very competitive industry that features much larger competitors, such as Cree and Acuity Brands. While Revolution's stock price spiked in 2013, the company remains small in comparison to those companies. Then there is the fact that it's unprofitable, and with erratic revenue at that. In my opinion, Revolution Lighting does not live up to its market cap of nearly $315 million; it seems expensive and risky.

There's a huge difference between a good stock and a stock that can make you rich 
The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2871216, ~/Articles/ArticleHandler.aspx, 9/17/2014 5:51:39 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 17,156.85 24.88 0.15%
S&P 500 2,001.57 2.59 0.13%
NASD 4,562.19 9.43 0.21%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/17/2014 3:59 PM
RVLT $1.77 Up +0.09 +5.36%
Revolution Lightin… CAPS Rating: *

Advertisement