Cooper Industries plc (CBE) completed the acquisition of the Norwegian closed circuit television (CCTV) systems manufacturer Hernis Scan Systems AS, a group company of Vislink plc. The acquisition had been subjected to regulatory clearances and consent of the shareholders of Vislink plc.
Hernis specializes in making CCTV systems, designed specially for onshore and offshore oil and gas, marine and petrochemical markets worldwide. The transaction was initially announced in mid-November 2010 and following the completion Hernis was expected to become a part of Cooper’s Safety division.
CCTV systems manufactured by Hernis are explosion-proof and capable of operating in difficult working conditions. Cooper is focused on enhancing its product portfolio suitable for explosion-proof harsh and hazardous environments. The worldwide CCTV market covered by Hernis will help Cooper to expand its global presence, especially in Europe and Asia.
Hernis is the fifth acquisition made by Cooper in 2010 and is the third one in harsh and hazardous environments platform. In November 2010, Cooper had acquired two UK-based companies, Mount Engineering plc and Apex Lighting Controls Ltd. Mount Engineering manufactured specialty threaded adaptors and reducers for harsh and hazardous environments and Apex manufactured Energy Management lighting controls.
Cooper’s strong balance sheet and a good acquisition strategy provide it with substantial growth opportunity. Though pressures in commercial markets are expected to be a drag on earnings, numerous items such as lighting retrofit, government spending, energy efficiency projects and stimulus will help to buffer the underlying pressure.
Residential markets appear to have bottomed out and should experience a modest growth. The company is well positioned to capitalize on the potential for renewed spending on transmission and distribution products as utilities begin to open up their spending again.
However, heightened global competition, given that Cooper expands its international exposure, can act as a negative catalyst for the company. Major competitors of the company are ABB Ltd. (ABB), General Electric Co. (GE) and Stanley Black & Decker Inc. (SWK).
Operations and supply sources located outside the United States, particularly the emerging markets, are subject to increased risks. Operating entities outside the USA contributes significantly to the company’s revenue and earnings.
Incorporated in Ireland, headquartered in Houston, Texas, Cooper Industries plc is a diversified manufacturer, marketer, and distributor of electrical products, tools, and hardware. General industrial manufacturers, such as those in the aerospace and automobile industries, are the main users of Cooper’s power tools and assembly systems. Its brands include Buss, Edison, Crouse Hinds, Weller, DGD, Buckeye, Cooper, and Master Power.
We continue to maintain a Neutral rating on Cooper Industries for the long term. The company has a Zacks #2 Rank (Buy recommendation) over the next one-to-three months.
ABB LTD-ADR (ABB): Free Stock Analysis Report
COOPER INDS PLC (CBE): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis Report
STANLEY B&D INC (SWK): Free Stock Analysis Report
Zacks Investment Research
