Cooper Industries Ltd. (CBE) made a cash offer of 185 pence per share to acquire Laird plc ("Laird") on June 1, 2011. Fulfillment of just a few pre-conditions is required for the proposal.
Cooper believes the deal is very much justified and will give good premium cash value.
However, the proposal was rejected by the board of Laird as it currently does not want to move on the deal with Cooper. However, Cooper is committed to make the deal successful through talks with Laird.
The offer price given by Cooper represents a 35% premium on Laird's closing share price of 137.3 pence on June 15, 2011 and a 30% premium to the average closing price of Laird's shares over the period of 12 months, ended on 15 June 2011.
Cooper has made 34 acquisitions and have successfully integrated them over the past 7 years, thus building on its product portfolio. Laird’s Material, components and wireless system offerings complements Bussmann's, a division of Cooper, leading electronics and industrial products.
Cooper's strong balance sheet supports internal growth projects and helps the company to capitalize on an improving acquisition pipeline. Though the company’s investment in new product development and global initiatives have moderated margin, Cooper believes that it will result in continued future growth opportunities. Furthermore, the company expects to benefit in 2011 from its pricing actions taken during the first quarter, offsetting commodity cost pressures.
However, demand for electrical products follows general economic conditions and is usually sensitive to activity in the commercial and residential construction and renovation markets, industrial production levels, electronic component production and spending by utilities for replacements, expansions and efficiency improvements. Furthermore, price increases or significant shortages of raw materials and components could adversely affect operating costs and the competitive position of its products.
Major competitors of Cooper are ABB Ltd. (ABB), General Electric Co. (GE) and Stanley Black & Decker Inc. (SWK).
Cooper Industries Ltd. was incorporated under the laws of Bermuda on May 22, 2001, and became the successor-registrant to Cooper Industries Inc. on May 22, 2002. Cooper recently announced that reorganization activities have been completed and the company is incorporated in Ireland. The transaction was completed on September 8, 2009, following the receipt of the required approval from the Supreme Court of Bermuda.
We currently maintain our Neutral rating on Cooper, with a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.
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