Dover Corporation (DOV) completed the acquisition of Vienna, an Austria-based Sound Solutions business line of NXP Semiconductors NV (NXPI) for $855 million.
The acquisition was initially slated to close by the end of the first quarter of 2011. However, it was delayed due to the request of additional briefings from the non-U.S. and non-EU governmental antitrust regulators.
Sound Solutions is one of the world’s leading manufacturers of dynamic speakers and receivers for cell phones and other consumer electronics. It has manufacturing facilities in Vienna and Beijing.
Sound Solutions will become a part of Knowles Electronics within Dover’s Electronic Technologies segment. Electronic Technologies manufactures advanced micro-component products for the hearing aid and consumer electronics industries, high frequency capacitors, microwave electro-magnetic switches, radio frequency and microwave filters, electromagnetic products, and frequency control/select components.
Dover foresees strong growth in the global cell phone market as cell phones are becoming indispensable for consumers. Besides, the quality of sound is an important factor in the current mobile phone market. This acquisition will allow Dover to leverage that trend by broadening its product portfolio. With the addition of Sound Solutions, Knowles Electronics will now be the leading audio input and output supplier in the mobile handset industry.
In April 2011, Dover reported first-quarter 2011 adjusted earnings per share (EPS) of 92 cents, beating the Zacks Consensus Estimate of 90 cents. Results recorded an increase of 42% over the prior-year quarter’s EPS of 65 cents driven by strength in end-markets, with particular strength seen at Fluid Management and Industrial Products.
Revenues posted an improvement of 24% year over year to $1.96 billion, topping the Zacks Consensus Estimate of $1.85 billion.
For fiscal 2011, management expects revenue to grow in the range of 12% – 14% (up from its previous guidance of 9%-11%), fueled by an organic revenue growth of 9% – 11% (earlier expected 6%-8%) and growth of 3% (same as previous expectation) from acquisitions. Management also projects EPS in the range of $4.30 – $4.45 (up from the previous range of $4.05 – $4.25), suggesting a year-over-year growth in the range of 24% to 28% over adjusted fiscal 2010 EPS of $3.47.
Management expects corporate expense to be approximately $135 million and interest expense to be around $116 million. Full-year tax rate is slated to be in the range of 27% to 28%.
Solid performance and bookings across all segments along with the ability to generate strong cash flow, continued focus on margin improvement and shareholder value position the company to post better results going forward.
Dover continues to pursue strategic acquisitions in a bid to improve its product offerings and complement its organic growth strategy. The acquisition of Sound Solutions, the world’s leading manufacturer of dynamic speakers and receivers for cell phones and other consumer electronics, will place Dover as the leading provider of acoustic products serving the fast growing cellular handset market.
We currently have a Zacks #3 Rank (short-term Hold recommendation) on the stock.
Dover Corporation is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment. The company 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 competes with the likes of Cooper Industries plc (CBE), Ingersoll-Rand Plc (IR) and Weatherford International Ltd. (WFT).
