Ingersoll Rand Inc. ( IR Quick Quote IR - Free Report) yesterday announced that it agreed to acquire Bottrop, Germany-based Seepex GmbH. The transaction value has been fixed at €431.5 million in cash. This is the company’s second buyout since the start of 2021, and is believed to be a strategic fit for its existing businesses. It is worth mentioning here that Ingersoll’s shares gained 3.12% yesterday, ending the trading session at $46.92. Seepex specializes in manufacturing and providing progressive cavity pumps — including food, standard, metering, open hopper, semi-submersible and others. Prime markets served include chemical, water, food and beverage, and wastewater. It has facilities in the Asia Pacific and North America as well as an installed base of more than 0.21 million pumps. Its aftermarket business (recurring in nature) accounts for more than 40% of revenues annually. In 2021, it is predicted to generate revenues of €160 million, with year-over-year growth in double-digits. Inside the Headlines
As noted, the addition of Seepex to Ingersoll’s portfolio will strengthen the latter’s product portfolio, enhance its technical and digital capabilities, and boost its aftermarket growth opportunities. Also, Seepex’s presence in multiple end markets and geographies (especially in Europe, Asia and the Americas) and an employee base of 800 people will likely prove to be a boon for Ingersoll.
The acquired assets, upon completion, will form part of Ingersoll’s Precision and Science Technologies (“PST”) segment. The Seepex buyout is anticipated to increase PST’s total addressable market by $1.7 billion. The PST segment manufactures products like doing and metering pumps (for use in multiple industries) and liquid and gas pumps for use in life sciences, lab and medical markets. Key brands are Hartell, Welch, ARO, Dosatron and others. In first-quarter 2021, the segment generated revenues of $215.7 million, reflecting growth of 12.2% from the year-ago quarter. Also, the top line represented 15.7% of the company’s total revenues in the quarter. Upon the receipt of required regulatory approvals, Ingersoll anticipates completing the buyout in the third quarter of 2021. Ingersoll’s Other Buyout Activities
The company believes in the expansion of product lines, strengthening footholds in existing and new markets, and expanding customer base through acquisitions. In the first quarter of 2021, acquisitions had a positive impact of 1.4% on the company’s sales. For 2021, it anticipates acquired assets to boost its sales by $60 million.
In February 2021, Ingersoll acquired Tuthill Vacuum and Blower Systems, and integrated it with its Industrial Technologies and Services segment. Also, it acquired Albin Pump SAS — a manufacturer of electric peristaltic pumps based in France — in September 2020. The buyout was added to Ingersoll’s PST segment. Zacks Rank, Price Performance and Estimate Trend
With a market capitalization of $19.1 billion, Ingersoll currently carries a Zacks Rank #4 (Sell). The company faces headwinds from a highly leveraged balance sheet, exposure to international markets and high costs. However, efforts to improve growth opportunities through buyouts and other means might help.
In the past three months, the company’s stock declined 0.5% against the industry’s growth of 5.6%.
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The Zacks Consensus Estimate for Ingersoll’s earnings is pegged at $1.71 for 2021 and $1.99 for 2022, reflecting declines of 8.6% and 5.7% from the 60-day-ago figures. Also, the estimate for second-quarter 2021 earnings at 39 cents reflects a decrease of 13.3% from the 60-day-ago figure of 45 cents.