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Dover Corporation (DOV - Analyst Report) offered €300 million (approximately $400 million) worth of notes at a coupon rate of 2.125%, maturing in 2020. The settlement date for the offer is Dec 4, 2013 and the net proceeds from this issue will be used for general corporate purposes.

The new notes will be redeemable at the option of Dover in whole or in part at any time at a redemption price that includes a make-whole premium, with accrued interest to the redemption date. The book-running managers for the issue are the London Branch of Deutsche Bank AG (DB - Analyst Report) and The Goldman Sachs Group, Inc. (GS - Analyst Report).

The notes have been assigned an A2 rating by Moody's Investors Service -- the rating unit of Moody's Corporation (MCO - Analyst Report). The rating agency assigned the stable rating supported by Dover's diversified product portfolio, geographic mix and consistent profitability, attractive returns on capital, strong cash flow generation and good liquidity.

As of Sep 30, Dover had $669 million of commercial paper outstanding and a cash position of $740 million, of which $688 million was held outside the United States.  According to Moody’s, Dover’s fourth quarter has historically generated strong cash flow. This, in addition to the receipt of the note proceeds, might be used to reduce commercial paper borrowings.

Consequently, the note issuance will not materially impact financial leverage. Even though it will lead to higher interest expense going forward, it will beneficially extend the company's debt maturity profile.

Meanwhile, Dover will continue to benefit from its active acquisition pipeline, bookings and orders growth. The spin-off of certain parts of communication technologies businesses into a standalone, publicly-traded company will simplify Dover’s business profile and enable it to focus on its key growth spaces – Energy, Fluids, Refrigeration & Food Equipment and Printing & Identification.

The company’s bookings and backlog increased from the prior-year levels in the third quarter. Dover’s sound balance sheet coupled with solid earnings growth should allow the company to continue its dividend hike and share repurchases in the years ahead.

Illinois-based Dover is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment. It operates through four major operating segments: Communication Technologies, Energy, Engineered Systems and Printing & Identification.

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