Cooper Industries plc (CBE) acquired a manufacturer of power electronic components, Martek Power, for approximately euro 130 million (inclusive of assumed debt). Martek is an expert in producing specialized power management devices for the military, heavy-duty transportation, aerospace, medical, telecom and hybrid/electrical vehicle markets.
Martek will incorporate in Cooper Industries’ the Cooper Bussmann division, thus expanding the division’s power electronic and power conversion applications portfolio. The company’s performance in power management for the military/aerospace and North American transportation markets will be enhanced with this acquisition. Moreover, it will be able to penetrate further in medical, telecom, data storage, European transportation and the high growth hybrid/electrical vehicle markets.
The acquisition will increase the annual revenue of Bussmann Transportation portfolio to $220 million. Martek will strengthen Transportation's presence within North America and Europe.
The company is expected to realize an outsized portion of its growth from the developing markets in China, the Middle East and Mexico. Industrial, utility and energy markets are expected to rapidly expand and industrializing economies will help to offset some of the declines in the already developed regions. This will eventually help to support higher growth rates for the current year.
However, heightened global competition, given that Cooper expands its international exposure, can act as a negative catalyst for the company. Major competitors of the company are ABB Ltd. (ABB), General Electric Co. (GE) and Stanley Black & Decker Inc. (SWK). Operations and supply sources located outside the United States, particularly the emerging markets, are subject to increased risks. Operating entities outside the USA contribute significantly to the company’s revenue and earnings.
Incorporated in Ireland and headquartered in Houston, Texas, Cooper Industries plc is a diversified manufacturer, marketer, and distributor of electrical products, tools, and hardware. General industrial manufacturers, such as those in the aerospace and automobile industries, are the main users of Cooper’s power tools and assembly systems. Its brands include Buss, Edison, Crouse Hinds, Weller, DGD, Buckeye, Cooper, and Master Power.
We continue to maintain a Neutral rating on Cooper Industries, with a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.
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