Cooper Industries plc (CBE) acquired Gitiesse srl (Gitiesse), an Italian manufacturer of marine and oil and gas communications systems.
Gitiesse specializes in the manufacture of Digital integrated multimedia communications systems (IMCOS) used for vessels worldwide.
The Cooper Safety division will incorporate Gitiesse.
The acquisition strengthens Cooper Industries’ goal of expanding and solidifying its explosion-proof harsh and hazardous environment platform on improved technology and capability. From 2010, the company has made three acquisitions with commitment to strengthen this platform.
Products from Gitiesse compliments Cooper Safety’s present offering of MEDC explosion-proof beacons and sounders. Gitiesse enjoys an important position in the worldwide marine market, with a strong base in Europe and Asia. The acquisition will expand Cooper Industries’ global presence.
Cooper’s strong balance sheet supports internal growth projects while facilitating the company to capitalize on an improving acquisition pipeline. Though the company’s investment in new product development and global initiatives have moderated margin, Cooper believes that it will result in continued future growth opportunities. Furthermore, the company expects to benefit in 2011 from its pricing actions taken during the first quarter, offsetting commodity cost pressures.
However, demand for electrical products follows general economic conditions and is usually sensitive to activity in the commercial and residential construction, as well as renovation markets, industrial production levels, electronic component production and spending by utilities for replacements, expansions and efficiency improvements. Furthermore, price increases or significant shortages of raw materials and components could adversely affect operating costs and the competitive position of its products.
Major competitors of Cooper are ABB Ltd. (ABB), General Electric Co. (GE) and Stanley Black & Decker Inc. (SWK).
Cooper Industries Ltd. was incorporated under the laws of Bermuda on May 22, 2001, and became the successor-registrant to Cooper Industries Inc. on May 22, 2002. Cooper recently announced that reorganization activities have been completed and the company is incorporated in Ireland. The transaction was completed on September 8, 2009, following the receipt of the required approval from the Supreme Court of Bermuda.
We currently maintain our Neutral rating on Cooper, with a Zacks #4 Rank (Sell recommendation) over the next one-to-three months.
