Ingersoll-Rand Plc (IR) has agreed to divest a 60% stake in its Hussmann business to private equity firm Clayton Dubilier & Rice, LLC (CD&R) for cash proceeds of $370 million. The transaction is expected to close toward the end of the third quarter.
With the proceeds the company intends to accelerate its $2 billion share buyback program, which began on June 8, 2011. Management expects to repurchase 28 million-32 million shares by the end of 2011.
In addition, Ingersoll-Rand will continue to participate in the future success of Hussmann through the retention of a 40% stake in the business and, consequently, reclassify Hussmann from discontinued to continuing operations for the third quarter of 2011 and all prior periods.
Generating revenues of $800 million, Hussmann provides display cases, refrigeration systems, installation and services to food retailers around the world.
The company preferred to sell its business to CD&R, primarily due to its experience with food and retail markets and its focus on driving profitable growth. Moreover, the divesture will provide immediate value to Ingersoll-Rand’s shareholders.
Management reiterated its fiscal 2011 earnings expectation of $2.90 to $3.10 per share, excluding impairment charges related to Hussmann.
Recently, Ingersoll-Rand provided its revenue estimate for fiscal 2011 in the range of $14.7 billion-$14.9 billion.
The company also projected EPS from continuing operations in the range of 85 cents-95 cents for the third quarter of fiscal 2011. Revenues were expected in the range of $3.85 billion-$3.95 billion.
Based in Dublin, Ireland, Ingersoll-Rand, designs, manufactures, sells, and services a range of industrial and commercial products in the United States and internationally.
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