Lear Corp. Rallies on Plans to Close Eagle Ottawa Deal - Analyst Blog

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Shares of Lear Corp. ( LEA ) rose 0.9% and closed at $99.12 on Aug 20 after media reports revealed that the company is nearing the closing of the Eagle Ottawa LLC acquisition deal, involving over $800 million.

Auburn Hills, MI-based Eagle Ottawa is a supplier of premium automotive leather products utilized by different brands of vehicles including the likes of BMW, Buick, Honda Motor Co., Ltd. ( HMC ), Volvo, Renault, Chrysler and Mercedes-Benz. In 2006, Lear expanded its leather operations with the introduction of the Aventino premium leather for seat ventilation and customizable fabric.

Eagle Ottawa is currently owned by Milwaukee-based investment firm Everett Smith Group Ltd. The deal with Lear is expected to be completed in the next couple of weeks.

Lear posted adjusted earnings per share of $2.12 in the second quarter of 2014, marking a 31% rise from $1.62 in the year-ago quarter. Moreover, earnings beat the Zacks Consensus Estimate of $1.96. Adjusted net income amounted to $174 million, up 26% over the second quarter of 2013. Revenues increased 11% to $4.59 billion in the reported quarter, beating the Zacks Consensus Estimate of $4.44 billion.

For 2014, Lear anticipates revenues in the range of $17.6-$17.9 billion. Meanwhile, adjusted net earnings are forecasted in the $610-$645 million band for the year. Core operating earnings are estimated to come in between $975 million and $1.03 billion, up from the previous outlook of $935-$985 million.

Lear produces auto seats and electrical power systems for automakers like Ford Motor Co. ( F ), General Motors Company ( GM ) and BMW AG. Importantly, these companies generated 54% of Lear's sales in 2013.

Currently, Lear carries a Zacks Rank #3 (Hold).

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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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