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Dover To Buy Wayne Fueling, Expands in Global Retail Fueling
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Dover Corporation (DOV - Free Report) will acquire Wayne Fueling Systems Ltd. from Riverstone Holdings LLC for $780 million in cash. In addition to augmenting Dover’s portfolio, the transaction provides significant margin enhancement opportunities.
Headquartered in Austin, TX, Wayne is a global provider of fuel dispensing, payment, systems and aftermarket services for retail and commercial fuel stations with manufacturing operations across Sweden, China and Brazil. Backed by its advanced payment and systems solutions, Dover is poised to capitalize on the emerging conversion of U.S.-based fuel retailers to Europay, MasterCard and Visa ("EMV") chip security technology. Through its wide network of distributors and service partners, Wayne sells its products in over 140 countries and is projected to generate revenues of approximately $550 million in 2016.
Wayne's product line is a synergistic fit with Dover’s OPW and Tokheim, particularly its U.S. dispenser, payment and systems businesses. Tokheim and OPW have been leaders in the retail fueling industry for more than a century. Following the acquisition, the combined business will offer an end-to-end solution that will benefit customers in the growing global retail fueling market. The transaction will enable Dover to fully capitalize on the high-growth EMV upgrade cycle underway in the U.S. Combination of Wayne's innovative product offerings with OPW and Tokheim will enable Dover to realize annualized retail fueling revenue of $1.4 billion.
The transaction is expected to close in the second half of 2016, pursuant to customary closing conditions including applicable regulatory approvals. The buyout will be funded by a combination of cash on hand and incremental debt.
The purchase price multiple is approximately 10 times 2016 expected EBITDA. This, however, excludes the estimated annual run-rate synergies of approximately $30 million which are expected to be achieved over a three-year period.
The transaction will be dilutive to continuing earnings per share in 2016, including normal transaction-related costs, purchase accounting and related interest expense, subject to the timing of the close of the transaction. However, in 2017, the buyout will be modestly accretive to continuing earnings per share due to one-time costs to achieve synergies, and including normal purchase accounting amortization and related interest expense.
Dover intends to remain focused on expanding its business in key markets that offer significant growth potential and lead to organic and inorganic growth at all segments. Moreover, the company strives to innovate its products as per customer needs in order to gain market share. However, unstable oil prices and foreign exchange volatility remain concerns for Dover.
Dover currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Gorman-Rupp Co. (GRC - Free Report) , Kadant Inc. (KAI - Free Report) and Nordson Corporation (NDSN - Free Report) . All these three stocks sport a Zacks Rank #1 (Strong Buy).
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Dover To Buy Wayne Fueling, Expands in Global Retail Fueling
Dover Corporation (DOV - Free Report) will acquire Wayne Fueling Systems Ltd. from Riverstone Holdings LLC for $780 million in cash. In addition to augmenting Dover’s portfolio, the transaction provides significant margin enhancement opportunities.
Headquartered in Austin, TX, Wayne is a global provider of fuel dispensing, payment, systems and aftermarket services for retail and commercial fuel stations with manufacturing operations across Sweden, China and Brazil. Backed by its advanced payment and systems solutions, Dover is poised to capitalize on the emerging conversion of U.S.-based fuel retailers to Europay, MasterCard and Visa ("EMV") chip security technology. Through its wide network of distributors and service partners, Wayne sells its products in over 140 countries and is projected to generate revenues of approximately $550 million in 2016.
Wayne's product line is a synergistic fit with Dover’s OPW and Tokheim, particularly its U.S. dispenser, payment and systems businesses. Tokheim and OPW have been leaders in the retail fueling industry for more than a century. Following the acquisition, the combined business will offer an end-to-end solution that will benefit customers in the growing global retail fueling market. The transaction will enable Dover to fully capitalize on the high-growth EMV upgrade cycle underway in the U.S. Combination of Wayne's innovative product offerings with OPW and Tokheim will enable Dover to realize annualized retail fueling revenue of $1.4 billion.
The transaction is expected to close in the second half of 2016, pursuant to customary closing conditions including applicable regulatory approvals. The buyout will be funded by a combination of cash on hand and incremental debt.
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The purchase price multiple is approximately 10 times 2016 expected EBITDA. This, however, excludes the estimated annual run-rate synergies of approximately $30 million which are expected to be achieved over a three-year period.
The transaction will be dilutive to continuing earnings per share in 2016, including normal transaction-related costs, purchase accounting and related interest expense, subject to the timing of the close of the transaction. However, in 2017, the buyout will be modestly accretive to continuing earnings per share due to one-time costs to achieve synergies, and including normal purchase accounting amortization and related interest expense.
Dover intends to remain focused on expanding its business in key markets that offer significant growth potential and lead to organic and inorganic growth at all segments. Moreover, the company strives to innovate its products as per customer needs in order to gain market share. However, unstable oil prices and foreign exchange volatility remain concerns for Dover.
Dover currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Gorman-Rupp Co. (GRC - Free Report) , Kadant Inc. (KAI - Free Report) and Nordson Corporation (NDSN - Free Report) . All these three stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>