The word discipline and acquisitions rarely go together in this day and age.
Greif Inc (NYSE: GEF) is thus an oddity or a rarity rather. It has managed to be disciplined in its acquisitions. This is rare among companies. None of that one time big acquisition stuff. That doesn't work - many integration issues. GEF does its acquisitions small and frequently. It has a system called the Greif Business System to integrate and streamline all businesses that is acquires.
During financial year 2008, the Company completed acquisitions of four industrial packaging companies and one paper packaging company and made a contingent purchase price payment related to an acquisition from October 2005 for an aggregate purchase price of $90.3 million. During 2007, the Company completed seven acquisitions of industrial packaging companies for an aggregate purchase price of $346.4 million. These industrial packaging and paper packaging acquisitions are expected to complement the Company’s existing product lines that together will provide growth opportunities and scale.
The company has a policy of acquiring companies at a PE of 5 to 7 times earnings. It generally sticks to companies from 30M to 300M. It's current market cap is around $2.4B. It acquires companies to increase its product footprint in a given region.
Currently, trading at 26 times earnings, it is by no means cheap. I'm hoping for the market to turn, perhaps creating a buying opportunity.
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