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Dover Makes Strategic Move: Buys Ravaglioli, Sells Tipper Tie


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The maker of industrial products and manufacturing equipment, Dover Corporation (DOV - Analyst Report) announced its acquisition of Ravaglioli as well as the divestment of its Tipper Tie unit in order to expedite its business strategy. These actions will bolster Dover’s business in key markets.

Ravaglioli Buyout

Dover has acquired Ravaglioli S.p.A. Group (Ravaglioli), a global automotive service equipment manufacturer for $274 million (EUR 245 million). The buyout will expand Dover’s Vehicle Service Group’s (VSG) product range and the markets it serves. Consequently, the company will be able to cross-sell multiple products to its global customer base.

Headquartered in Bologna, Italy, Ravaglioli is a leading manufacturer of automotive service equipment, including automotive lifts, tire and wheel service equipment, and diagnostic equipment for cars, trucks, commercial vehicles and motorbikes. Founded in 1958, Ravaglioli has manufacturing operations in Italy and more than 650 employees across the region. Annual revenue from Ravaglioli in 2016 is estimated to be approximately $165 million (about EUR 150 million).

Gains from the Acquisition

The buyout is in sync with Dover’s acquisition strategy. Ravaglioli’s products, technology and customer base are highly complementary to VSG.  Together, VSG and Ravaglioli will offer a best-in-class suite of products to customers.

Ravaglioli’s products will significantly broaden Dover’s capabilities and reach as it expands into attractive product adjacencies like tire and wheel equipment. Dover also remains excited about the growth opportunities for the combined vehicle service business.

Tipper Tie Divestment

Dover has signed a definitive agreement to sell its Tipper Tie unit to JBT Corporation (JBT) for $160 million. The transaction, which is subject to customary regulatory approvals, is expected to close in the fourth quarter of 2016.  

Tipper Tie is a leading provider of engineered processing and packaging solutions, and related consumables to the food industry. The company, headquartered in Apex, NC, has four manufacturing locations around the world.

Benefits from the Sale

The sale marks another step in the execution of Dover’s strategy to focus on business mix.  Tipper Tie’s customers and channel partners will benefit due to this transaction’s strategic fit with JBT, as it brings together two strong players in the food processing industry.

On the other hand, the addition of Tipper Tie will expand JBT's protein platform to include complementary packaging solutions. Further, Tipper Tie's globally recognized brand, advanced technology, and relationships with major food processors in the U.S and Europe will help in expanding JBT’s presence in Asia and Latin America.

Our Take

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 introduce new products to suit customer needs in order to gain market share. However, unstable oil prices and foreign exchange volatility remain matters of concern for Dover.

Zacks Rank

Dover currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the machinery-general industrial industry include DXP Enterprises, Inc. (DXPE - Snapshot Report) , Nordson Corporation (NDSN - Snapshot Report) and Middleby Corp. (MIDD - Analyst Report) .

DXP Enterprises has witnessed solid estimate revisions of 1500% over the past 60 days. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nordson Corporation, also a Zacks Rank #1 stock, has seen upward estimate revisions of around 7% over the past 60 days.

Middleby Corp. which carries a Zacks Rank #2 (Buy), has seen upward estimate revisions of 5% over the last 60 days.

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