Dover (DOV) Acquires Liquip to Strengthen Fluids Segment - Analyst Blog

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OPW, a unit of Dover Corporation 's ( DOV ) Fluids segment, has signed a definitive agreement to acquire all the outstanding shares of Liquip International. The acquisition is a strategic fit for OPW. Financial terms of the transaction were not disclosed.

Headquartered in Smithfield, NSW, Australia, Liquip is a leading Australian designer and manufacturer of bulk liquid handling and storage solutions in the petroleum, aviation, and chemical markets. Liquip expects to generate around $40 million revenue in 2014.

On the other hand, OPW is a global leader in fluid handling, management, monitoring and control solutions for the safe and efficient handling and distribution of fuels and critical fluids.

Liquip considerably strengthens OPW's fluid handling position in Australia and throughout Asia Pacific. The acquisition of Liquip will enable OPW to form a superior product portfolio, which will help in providing for the exclusive requirements of the latter's chemical and industrial and tank truck customers.

The transaction, subject to customary regulatory approvals, is expected to be completed in the third quarter of 2014.

Dover's expansion has been mainly driven by acquisitions. In fiscal 2013, the company made 10 acquisitions for $323 million. In Nov 2013, Dover completed its previously announced acquisition of Italy-based Finder. The move was aimed to strengthen the position of the Pump Solutions Group, an operating unit within Dover's Engineered Systems segment, and increase the company's global footprint.

In early 2014, Dover acquired Italy-based MS Printing Solutions S.r.l. This acquisition will facilitate the company to expand beyond the fast moving consumer goods and industrial markets to the textile sector. Further in Jul 2014, its Energy segment acquired The WellMark Company which will help in the expansion of geographic coverage of valve, chemical injection pump and controls offerings of Dover.

Additionally, Dover witnessed strong growth in second-quarter 2014 results mainly contributed by organic growth and acquisitions. Adjusted earnings grew 14% year over year to $1.29 per share.

Total revenue also rose 6% year on year to $2 billion in the quarter, including 3% contribution each from organic growth and acquisitions. Acquisition growth comprised of 9% in fluids, 4% Engineered Systems and 1% in energy.

Dover raised its full-year 2014 earnings guidance to a new range of $4.75-$4.85 per share. The company now expects organic revenue growth of 4%. Acquisitions are expected to contribute 3% to the growth, resulting in revenue growth of 6%-7% in fiscal 2014.

Dover also approved a 7% increase in quarterly dividend on Aug 7. This marked the company's 59th consecutive hike in its payout. Dover will now pay 40 cents per share to shareholders, more than the prior payout of 37.5 cents. The dividend increase came exactly after a year.

Dover remains optimistic about the acquisitions in its pipeline which are expected to close in the coming quarters. Moreover, Dover's continuous focus on development and delivery of products and solutions to customers will drive growth.

Dover currently carries a Zacks Rank #3 (Hold). Other stocks in the same industry with favorable Zacks ranks are DXP Enterprises, Inc. ( DXPE ), IDEX Corp. ( IEX ) and Ingersoll-Rand Plc ( IR ). All these stocks carry a Zacks Rank #2 (Buy).

Illinois-based Dover is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment. It operates through four major operating segments: Communication Technologies, Energy, Engineered Systems and Printing & Identification.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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