Dover Corporation (DOV) completed the acquisition of the global manufacturer of pump gears, pelletizers and filtration systems; Maag Group. The transaction value of the deal was nearly $285 million.
Earlier in February, Dover announced the inking of a deal with the Scottish industrial investor, Clyde Blowers Capital and the Switzerland based industrial investor, CGS Management to buy Maag Group. Further, it decided that Maag Group would be incorporated in the Pump Solutions Group (PSG) of Downers Glove within the Fluid Solutions Platform of Engineered Systems segment.
The acquisition will help Dover extend its global footprints covering areas in Switzerland, Germany, U.S., Italy and China where Maag Group operates. Moreover, the highly engineered global pumps, filtration systems as well as pelletizers for plastics, chemicals, extrusion and rubber industries will enhance the product portfolio of PSG and improve the fluid position of Dover.
The Engineered Solution segment is the highest revenue generating segment of Dover. Therefore, we think that the addition of Maag Group will help in generating more profits in the long run. In the short run, however, management expected the acquisition to be dilutive in 2012 due to the purchase and related costs.
Dover expects the completed acquisitions to deliver 18-22 cents per share. Moreover, it plans to make investments in Engineering to deliver growth.
Dover is intent on expanding organically by improving its product offering and through acquisitions. In 2011, it invested nearly $1.4 billion to acquire nine businesses in its target markets. It has acquired businesses like Advansor A/S, Sound Solutions and Harbison-Fischer Inc. to expand the end markets and augment the customer base.
Dover has also divested three non-profit making businesses which failed to match the long-term growth prospects set by the company. It has also realigned its businesses into new segment structures to complement the target growth markets.
Maag Group is the market leader of external pump technology and engineered integration solutions for the polymer, plastic, chemical and petrochemical industries. It provides high quality customer driven complete solutions of specialized pumps and pelletizers.
Based in New York, Dover is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment. It operates primarily in the U.S. and has subsidiaries and affiliates in Canada, France, Germany, the Netherlands, Sweden, China, and the United Kingdom. Dover caters to a diverse clientele primarily spread over the Americas, Europe, and Asia.
Dover currently retains a Zacks #3 Rank, implying a short-term “Hold” recommendation on the stock. It competes with companies like Cooper Industries plc (CBE),Ingersoll-Rand Plc (IR) and Weatherford International Ltd. (WFT).
