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Emerson to Buy Cooper-Atkins, Boosts Cold Chain Business

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Emerson Electric Company (EMR - Free Report) has decided to acquire a leading technology company in foodservice markets, Cooper-Atkins. The buyout will serve to deepen Emerson’s ability to cater to the needs of its cold chain customers, offering safe control of food as well as other temperature-sensitive products. Financial details of the deal have been kept under wraps. The transaction is anticipated to close within next couple of months after fulfilling regulatory conditions.

Cooper-Atkins’ added expertise, when combined with Emerson’s global cold chain business will expand latter’s capabilities in monitoring food, its preparation, as well as high-value shipments all through the supply chain to preserve freshness and quality.  Cooper-Atkins’ strong portfolio of automated temperature and monitoring solutions will augment Emerson’s ProAct Services portfolio for supermarkets and Cargo Solutions business.

The Acquiree

Headquartered in Middlefield, CT, Cooper-Atkins offers temperature management devices and wireless monitoring solutions for foodservice, industrial as well as healthcare markets. The company has offices with operations across Ohio, Florida and Singapore with about 150 employees. The company’s solutions utilize mobile and cloud-based quality, safety as well as compliance systems to modernize food quality management.

Existing Business Scenario

Emerson has been executing restructuring activities since 2015 to drive efficiency and growth. The company has taken a series of concerted efforts to develop a better brand with significant customer focus. Moreover, all of its segments garnered significant savings from restructuring actions, consequently adding to strength. Notably, this Zacks Rank #3 (Hold) company has outperformed the industry in the past six months, having appreciated 17.6% compared with the industry’s gain of 7.2%.

The company is on a constant lookout for small bolt-on and strategic acquisitions to increase sales to up to $20 billion and cash flow back to over $3.2 billion over a span of next five years. Some of the notable acquisitions made by the company in recent times include Pentair Valves & Controls and a business unit of Pentair plc. This apart, the company expanded global capabilities in fresh food monitoring, with the acquisitions of Locus Traxx and PakSense. These buyouts are likely to enable the company widen the scope of cargo solutions.

Despite these positives, macroeconomic factors like sluggish economic conditions, recession and adverse conditions in the end markets are impeding growth. Further, prolonged softness in the oil and gas markets has affected both capital spending and operational expenditure of clients, consequently marring the company’s prospects.

Stocks to Consider

Some better-ranked stocks from the same space include Deere & Company (DE - Free Report) , Actuant Corporation (ATU - Free Report) and Harsco Corporation (HSC - Free Report) . While Deere & Company sports a Zacks Rank #1 (Strong Buy), Actuant and Harsco carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Deere & Company has outpaced estimates in the preceding four quarters, with an average earnings surprise of 19.5%.

Actuant has surpassed estimates twice in the trailing four quarters, with an average positive earnings surprise of 0.8%.

Harsco has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 145.6%.

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