(DOV - Analyst Report
) has acquired Anthony International – a Sylma, California-based manufacturer of glass doors for commercial refrigerators – from private equity firm Avista Capital Partners for $602.5 million.
Anthony International has global operations with locations across U.S., Italy, China and South Africa. The company is expected to generate revenues of around $310 million in 2012. The acquisition will have a dilutive effect of 2 cents on Dover’s earnings in 2012 owing to integration and acquisition related costs but will be modestly accretive to earnings in 2013.
The company will be included in Dover’s Refrigeration & Industrial business, which is a part of the Engineered Systems segment. The Refrigeration & Industrial group manufactures products and systems serving the refrigeration/food, waste and recycling and other niche industrial markets. The group manufactures refrigeration systems, refrigeration display cases, walk-in coolers and freezers, commercial foodservice equipment, and other products for refrigeration of meat, poultry and other food products.
The majority of these manufactured products are used by the supermarket industry, retail and convenience stores, the commercial/industrial refrigeration industry, institutional and commercial foodservice and food production markets, and beverage can-making industries. The platform’s refrigeration/food related manufacturing facilities and distributing operations are principally in North America, Europe and Asia.
The acquisition will expand Dover’s product portfolio and enhance its service offerings. The company is committed to its target of achieving annual organic sales growth of 7% to 9% in the next three years, aided by acquisition growth of 3% to 5%. The company intends to focus on its five key growth spaces – communication components, energy, product ID, refrigeration and food equipment, and fluid solutions.
Anthony International commands leading positions in refrigeration and freezer doors, re-skinning services, and specialty & curved glass. This provides food retailers ample scope to improve energy efficiency and enhance the consumer shopping experience. Furthermore, Anthony’s global operations will provide a worldwide customer base and open new markets for Dover’s existing refrigeration business.
Dover continues to pursue strategic acquisitions in a bid to improve its product offering and complement its organic growth strategy. Its acquisition pipeline is ever active. It aims to either acquire add-on businesses that enhance its existing businesses or pursue larger, stand-alone businesses that will either complement its existing businesses or allow it to pursue innovative technologies within its key growth spaces.
Over the 2009 – 2011 timeframe, the company has expended over $1.7 billion to purchase 21 businesses. This includes the acquisition of Sound Solutions, its largest ever, for approximately $800 million in July 2011. The buy catapulted Dover’s Communication Technologies segment to the number one spot in audio components worldwide.
Dover recently reported its third-quarter 2012 earnings of $1.30 per share, beating the Zacks Consensus Estimate of $1.27. Results improved 10.2% from the prior-year quarter’s earnings of $1.18 per share.
Total revenue was $2.209 billion, improving 3% year over year, but missing the Zacks Consensus Estimate of $2.249 billion. The revenue increase included organic growth of 1% and increase from acquisitions by 4%, partially offset by negative impacts of 2% from foreign currency.
For 2012, Dover trimmed its guidance for both revenues and EPS. The company now expects revenue growth of 7%, down from the prior range of 8%-10%. Organic revenue growth will contribute 3% while acquisitions will add 4% to revenue growth. It expects earnings to lie in the band of $4.55-$4.65, down from the previous range of $4.70-$4.85.
However, Dover is facing challenges in the Handset and Electronic markets. Moreover, the uncertainty in the global economy adds to its worries.
New York-based Dover is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment. Dover competes with companies like Cooper Industries plc
, Ingersoll-Rand Plc
(IR - Analyst Report
) and Weatherford International Ltd.
(WFT - Analyst Report
) . Dover retains a short-term Zacks #3 Rank (Hold).