What synergies and cost savings does Vertiv expect from integrating Great Lakes Data Racks & Cabinets, and how will they be reflected in the financial statements?
Vertiv said the Great Lake acquisition will generate roughly $30‑$45 million of annual synergies within the first 12‑18 months, primarily from three levers: (1) cross‑sell of Vertiv’s power‑distribution and thermal‑management portfolio into Great Lake’s high‑density rack line, expanding the average contract size and lifting top‑line revenue; (2) consolidation of the supply‑chain and manufacturing footprint, which lets the combined company negotiate better component pricing and reduce duplicated tooling, trimming cost‑of‑goods‑sold (COGS) by about 4‑5 % of rack‑related sales; and (3) streamlining of corporate overhead and field‑service functions, cutting SG&A by roughly $10‑$12 million a year. Vertiv expects the net effect to lift adjusted EBITDA margin on a pro‑forma basis by 150‑200 basis points and to contribute an incremental $0.08‑$0.12 of adjusted EPS for FY2026.
On the financial‑statement side, Vertiv will likely book the acquisition cost (including the cash consideration and any contingent payments) as goodwill and intangible assets, while the expected cost‑savings will appear as lower COGS and reduced SG&A line items in the income statement. Management has indicated that the synergies will be accrued on a “real‑time” basis, so the 2025 Q4 results should already reflect the first tranche of SG&A reductions, with the bulk of the COGS improvements showing in Q1‑Q2 2026. The pro‑forma operating cash‑flow conversion should improve from ~55 % to ≈60‑62 %, providing a modest boost to free‑cash‑flow forecasts.
Trading take‑away: Vertiv is trading near its 200‑day moving average with modest upside momentum (≈3 % above the 20‑day EMA). The synergy‑driven margin expansion and EPS accretion give the company a 10‑12 % FY2026 earnings‑upgrade potential that is not yet fully priced in. For risk‑adjusted exposure, a buy‑on‑dip around $78‑$80 (support at the 50‑day MA) with a target of $90‑$95 aligns with the expected margin lift. Watch for the Q4 earnings release; a beat on SG&A savings or an early confirmation of the COGS reduction would be a catalyst, while any integration‑delay commentary could pressure the stock.