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Roper (ROP) Agrees to Sell Gatan to AMETEK for $925M in Cash

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Roper Technologies, Inc. (ROP - Free Report) has made the second attempt at selling its wholly-owned subsidiary, Gatan, Inc. On Sep 27, Roper and AMETEK, Inc. (AME - Free Report) signed a definitive agreement. Per the agreement, Roper will sell Gatan to AMETEK for $925 million in cash.

It is worth mentioning here that Roper earlier agreed to divest Gatan to Thermo Fisher Scientific Inc. (TMO - Free Report) . However, the deal collapsed (in June 2019) with the parties agreeing on the possible regulatory challenges they might face in the U.K.

Inside the Headlines

Based in Pleasanton, CA, Gatan is primarily engaged in manufacturing software and instruments used in electron microscopes. Its products — including electron energy filters, electron microscopy cameras and various accessories and software — are mainly used in academic, industrial and governmental laboratories.

Gatan generates approximately $180 million annually. It is part of Roper’s Measurement & Analytical Solutions segment, which accounted for 30.7% of Roper’s adjusted revenues of $1,288 million in the second quarter of 2019.

Subject to the fulfillment of closing conditions and receipt of regulatory approvals, Roper believes that the divestment will be completed in the fourth quarter of 2019.

Roper’s Inorganic Initiatives

We believe that the above-mentioned transaction is consistent with the company’s policy of strengthening its portfolio through inorganic moves, including divestments and acquisitions. The Gatan divestment will allow Roper to concentrate on its more profitable and core businesses.

In August 2019, Roper completed the acquisition of Exton, PA-based iPipeline. The buyout will help generate revenues of $200 million and free cash flow (after-tax) of $70 million in 2020. Also, cash accretion is predicted immediately from the buyout along with high-single-digit organic revenue growth.

In April 2019, Roper acquired Foundry, a specialist in providing software technologies. The buyout is predicted to generate $75 million in revenues in the first year of the completion.

Zacks Rank, Estimates and Price Performance of Roper

The company, with approximately $36.9-billion market capitalization, currently carries a Zacks Rank #2 (Buy).

In the past 60 days, earnings estimates for Roper have been improved. The Zacks Consensus Estimate for its earnings is pegged at $13.01 for 2019 and $13.31 for 2020, suggesting growth of 0.1% and 0.2% from the respective 60-day-ago figures.

Roper Technologies, Inc. Price and Consensus


In the past three months, the company’s share price has decreased 5.1% compared with the industry’s decline of 2.9%.

Another Stock That Warrants a Look

Another top-ranked stock in the industry is Crawford United Corporation (CRAWA - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Current-year earnings estimates for Crawford United suggest year-over-year growth of 36.2%.

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