Anthony Int'l in Dover's Kitty - Analyst Blog
December 03 2012 - 10:50AM
Zacks
Dover
Corporation (DOV) has acquired Anthony International – a
Sylma, California-based manufacturer of glass doors for commercial
refrigerators – from private equity firm Avista Capital Partners
for $602.5 million.
Anthony International has global
operations with locations across U.S., Italy, China and South
Africa. The company is expected to generate revenues of around $310
million in 2012. The acquisition will have a dilutive effect of 2
cents on Dover’s earnings in 2012 owing to integration and
acquisition related costs but will be modestly accretive to
earnings in 2013.
The company will be included in
Dover’s Refrigeration & Industrial business, which is a part of
the Engineered Systems segment. The Refrigeration & Industrial
group manufactures products and systems serving the
refrigeration/food, waste and recycling and other niche industrial
markets. The group manufactures refrigeration systems,
refrigeration display cases, walk-in coolers and freezers,
commercial foodservice equipment, and other products for
refrigeration of meat, poultry and other food products.
The majority of these
manufactured products are used by the supermarket industry, retail
and convenience stores, the commercial/industrial refrigeration
industry, institutional and commercial foodservice and food
production markets, and beverage can-making industries. The
platform’s refrigeration/food related manufacturing facilities and
distributing operations are principally in North America, Europe
and Asia.
The acquisition will expand
Dover’s product portfolio and enhance its service offerings. The
company is committed to its target of achieving annual organic
sales growth of 7% to 9% in the next three years, aided by
acquisition growth of 3% to 5%. The company intends to focus
on its five key growth spaces – communication components, energy,
product ID, refrigeration and food equipment, and fluid
solutions.
Anthony International commands
leading positions in refrigeration and freezer doors, re-skinning
services, and specialty & curved glass. This provides food
retailers ample scope to improve energy efficiency and enhance the
consumer shopping experience. Furthermore, Anthony’s global
operations will provide a worldwide customer base and open new
markets for Dover’s existing refrigeration business.
Dover continues to pursue
strategic acquisitions in a bid to improve its product offering and
complement its organic growth strategy. Its acquisition pipeline is
ever active. It aims to either acquire add-on businesses that
enhance its existing businesses or pursue larger, stand-alone
businesses that will either complement its existing businesses or
allow it to pursue innovative technologies within its key growth
spaces.
Over the 2009 – 2011 timeframe,
the company has expended over $1.7 billion to purchase 21
businesses. This includes the acquisition of Sound Solutions, its
largest ever, for approximately $800 million in July 2011. The buy
catapulted Dover’s Communication Technologies segment to the number
one spot in audio components worldwide.
Dover recently reported its
third-quarter 2012 earnings of $1.30 per share, beating the Zacks
Consensus Estimate of $1.27. Results improved 10.2% from the
prior-year quarter’s earnings of $1.18 per share.
Total revenue was $2.209 billion,
improving 3% year over year, but missing the Zacks Consensus
Estimate of $2.249 billion. The revenue increase included organic
growth of 1% and increase from acquisitions by 4%, partially offset
by negative impacts of 2% from foreign currency.
For 2012, Dover trimmed its
guidance for both revenues and EPS. The company now expects revenue
growth of 7%, down from the prior range of 8%-10%. Organic revenue
growth will contribute 3% while acquisitions will add 4% to revenue
growth. It expects earnings to lie in the band of $4.55-$4.65, down
from the previous range of $4.70-$4.85.
However, Dover is facing
challenges in the Handset and Electronic markets. Moreover, the
uncertainty in the global economy adds to its worries.
New York-based Dover is an
industrial conglomerate producing a wide range of specialized
industrial products and manufacturing equipment. Dover competes
with companies like Cooper Industries plc (CBE),
Ingersoll-Rand Plc (IR) and Weatherford
International Ltd. (WFT). Dover retains a short-term Zacks
#3 Rank (Hold).
COOPER INDS PLC (CBE): Free Stock Analysis Report
DOVER CORP (DOV): Free Stock Analysis Report
INGERSOLL RAND (IR): Free Stock Analysis Report
WEATHERFORD INT (WFT): Free Stock Analysis Report
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