Dover Corporation (DOV) has signed a definitive agreement to sell its DEK Printing Machines unit (DEK) to Hong Kong-listed ASM Pacific Technology. The sale, which is expected to close by mid 2014, is expected to generate cash proceeds of $170 million in addition to a contingent consideration of $30 million, subject to normal post-closing adjustments.
The news does not come as a surprise as the unit had been put on the block for a year. Dover had announced its plan to divest Everett Charles Technologies (including the Multitest business) and DEK at the time of releasing its fourth quarter 2012 results. These two non-core businesses served the electronic assembly and test markets.
The businesses were classified as discontinued operations since then. Subsequently, in Sep 2013, Dover entered into an agreement to sell its Multitest and Everett Charles Technologies (ECT) businesses to LTX-Credence Corporation (LTXC) for $93.5 million.
DEK came under the umbrella of Dover when it was acquired in 1983. DEK is a global provider of advanced materials deposition technologies and support solutions including printing equipment platforms, stencils, precision screens and mass imaging processes used primarily in the electronics industry.
The DEK business till now was part of Dover’s Printing & Identification segment. The Printing & Identification segment is a worldwide supplier of precision marking and coding, printing, dispensing, soldering and coating equipment and related consumables and services. The segment currently serves two global end-markets: Fast Moving Consumer Goods (FMCG) and Industrial. The segment generated $1 billion in sales in 2012, which was 12% of Dover’s total revenue. In the first nine months of fiscal 2013, the segment contributed 11% of total revenue with segment sales of $745 million.
This current sale along with the previously announced spin-off of certain parts of communication technologies businesses into a standalone, publicly-traded company will simplify Dover’s business profile and enable it to focus on its key industrial growth spaces –energy, refrigeration & food equipment, fluids, and printing & identification. Dover will continue to benefit from its active acquisition pipeline in these spaces as well as solid booking and orders growth. Dover’s sound balance sheet coupled with solid earnings growth should allow the company to continue its dividend hike and share repurchases in the years ahead.
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.
Dover currently retains a Zacks Rank #3 (Hold). Some better-ranked stocks in the machinery–general industrial sector include Xylem Inc. (XYL) and Flowserve Corp. (FLS). While Xylem carries a Zacks Rank #1 (Strong Buy), Flowserve holds a Zacks Rank #2 (Buy).
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