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Applied Industrial (AIT) to Buy FCX Performance for $768M

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Applied Industrial Technologies, Inc. (AIT - Free Report) recently signed a deal to acquire FCX Performance Inc. in order to strengthen its Specialty Flow Control business. The buyout is valued at $768 million (subject to customary adjustments) and will likely close within 30 days from the date of announcement.

Over the last month, shares of this Zacks Rank #3 (Hold) company have gained 11.8%, outperforming 5.2% growth recorded by the industry.

The company is poised to grow on the back of acquisitions, elevated demand and favorable foreign currency translation impact. However, headwinds such as stiff industry rivalry might dent the company’s performance in the near term.

Inside the Headlines

Columbus, OH-based FCX Performance is a prominent distributor of specialty process flow control services and products. The company distributes highly engineered instruments, valves, pumps, as well as lifecycle services to the Original Equipment Manufacturing and Maintenance, Repair and

Operations customers of different process and industrial end-markets. Customers are able to boost cost productivity, lower downtime, augment efficiency and accurately meet the growing compliance standards of regulatory authorities with the assistance of the company’s value-added solutions.

By acquiring FCX Performance, Applied Industrial Technologies will reinforce its position as a premium differentiated industrial distributor. The company stated that this buyout will help bolster its sales by $550 million and earnings before interest, taxes, depreciation and amortization (EBITDA) by $68 million within 12 months of the deal’s closure. The company anticipates recognizing one-time transaction cost in fiscal 2018 and estimates the acquired assets to boost earnings in fiscal 2019.

The company intends to fund the acquisition through a new credit facility, including a revolving loan facility of $250 million and Term Loan A of $780 million.

Stocks to Consider

Some better-ranked stocks in the same space are listed below:

Colfax Corporation currently sports a Zacks Rank #1 (Strong Buy). The company’s earnings per share (EPS) are projected to be up 1% in the next three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here.

Atlas Copco AB (ATLKY - Free Report) carries a Zacks Rank #2 (Buy). The company’s EPS is estimated to rise 12.50% over the next three to five years.

Barnes Group, Inc. (B - Free Report) also holds a Zacks Rank #2. The company’s EPS is expected to be up 10% during the same time frame.

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