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Dover (DOV) Ends Apergy Spin-Off to Focus on Core Business

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Dover Corporation (DOV - Free Report) has successfully completed the spin-off of its upstream energy businesses — Wellsite — which has been later named Apergy. Now on, Dover will be a standalone company focused on industrial products and manufacturing equipment, while Apergy will be an independent public company.

Spin-off History

In December 2017, Dover announced a tax-free spin-off of its upstream energy businesses within the Energy segment, which comprises Dover Artificial Lift, Dover Energy Automation, and US Synthetic. The company announced the separation, anticipating that its oil & gas exposed businesses will remain turbulent due to volatile oil prices.

On Apr 18, Dover’s board of directors formally approved the separation of Apergy through tax-free spin-off by distributing of all of the common stock of Apergy held by Dover to its shareholders.

Dover Corporation Price and Consensus


Dover Corporation Price and Consensus | Dover Corporation Quote

Spin-off Details

As per the terms of the spin-off, Dover’s shareholders received a share of Apergy stock for every two shares of Dover stock held at the close of business on the record date of Apr 30, 2018. However, Dover did not issue fractional shares of Apergy stock. Notably, Dover will receive a one-time cash payment of $700 million from Apergy after the spin-off.

About Apergy

Apergy, an upstream oil sector equipment manufacturer, has started trading from May 9 on the New York Stock Exchange, under the symbol "APY." Apergy provides highly engineered equipment and technologies that help companies drill for, and produce oil and gas. Moreover, the company is well-positioned to pursue strategic opportunities in the drilling and production sectors.

How Will It Help Dover?

The Apergy spin-off is expected to enable Dover to concentrate on its less volatile core platforms by delivering innovative equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services. Thus, Dover's core platforms, which compete in lower volatility industrial markets, will be well poised to provide a strong foundation for reinvestment, long-term sustainable revenues, and earnings growth and strong free cash flow generation.

Share Price Performance

Over the past year, Dover has underperformed the industry with respect to price performance. The stock has lost around 4%, while the industry recorded growth of 9% during the same time frame.

Zacks Rank & Key Picks

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

Better-ranked stocks in the same sector include Graco Inc. (GGG - Free Report) , Applied Industrial Technologies, Inc. (AIT - Free Report) and Atlas Copco AB (ATLKY - Free Report) . While Graco and Applied Industrial Technologies sport a Zacks Rank #1 (Strong Buy), Atlas Copco carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Graco has a long-term earnings growth rate of 10.3%. The stock has appreciated 24% in a year’s time.

Applied Industrial Technologies has a long-term earnings growth rate of 12%. The company’s shares have been up 10% during the past year.

Atlas Copco has a long-term earnings growth rate of 12.5%. Its shares have rallied 12% in the past year.

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