Dover Corp. (DOV) stated that its previously announced acquisition of the Vienna, Austria-based Sound Solutions business line of NXP Semiconductors NV (NXPI) for $855 million has been delayed due to the request of additional briefings from non-U.S. and non-EU governmental antitrust regulators.
All other closing conditions have been fulfilled, except for the above-mentioned review. Following the necessary clearances, the transaction is now expected to close in the second quarter of 2011 instead of the first.
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. The acquisition is expected to be slightly accretive to Dover’s earnings per share during the first full year of ownership.
Sound Solutions will be 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 become more and more indispensable for consumers. Furthermore, the quality of sound is a very important factor in the current mobile phone market. This acquisition will enable 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.
Dover’s fiscal 2010 adjusted EPS was $3.47 compared with $1.84 in the prior year. EPS reported during the year outperformed the Zacks Consensus Estimate of $3.36 and also whizzed past the company’s guided range of $3.30-$3.35.
Dover expects revenue to grow in the range of 9%–11% for fiscal 2011, fueled by an organic revenue growth of 6%–8% and 3% from acquisitions. Management also projects EPS in the range of $4.05–$4.25, suggesting a year-over-year rise in the range of 17% to 22% over adjusted fiscal 2010 EPS of $3.47.
Solid performance and bookings across all segments coupled with the ability to generate strong cash flow, continued focus on margin improvement and shareholder value position Dover for better results in the upcoming quarters. Further, it continues to pursue strategic acquisitions to improve its product offering and complement its organic growth strategy. We currently have a Zacks #2 Rank (short-term Buy recommendation) on the stock.
New York-based Dover is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment. Dover caters to a diverse clientele primarily spread over the Americas, Europe and Asia. The company classifies its business into four segments – Industrial Products, Engineered Systems, Fluid Management and Electronic Technologies. Dover competes with the likes of Cooper Industries plc (CBE), Ingersoll-Rand Plc (IR) and Weatherford International Ltd. (WFT).
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