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Actuant Buys Viking SeaTech for $225M

Industrial products company, Actuant Corporation (ATU), recently concluded the acquisition of Scotland-based Viking SeaTech. The agreed price of $225 million (£150 million) was paid via Actuant’s cash and revolving credit facility.

Viking SeaTech provides consistent service, expertise and innovations globally to meet the demands of the world’s offshore energy assets. The company’s services include marine engineering, survey & positioning, moorings, inspections and maintenance. However, a majority of the revenues is derived from the company’s offshore vessel mooring solutions which include design, rental, installation and inspection. Viking generated revenues of roughly $90.0 million in the past twelve months.

Viking SeaTech serves its customers primarily in the regions like U.K., Norway and Australia. Subsequent to the acquisition, Viking SeaTech’s revenues will be included in Actuant’s Energy segment. The company believes that it will derive great synergies from the acquisition because of the similarity of operations of the two companies.

The company has been making acquisitions for a long time. The company earns a portion of its revenues from the acquisitions undertaken in the past, contributing roughly 8% to fiscal 2012 revenue growth as well as 3% to fiscal third-quarter 2013 revenue growth.

Actuant’s strong cash position enables it to take on strategic acquisitions. Actuant expects to reach a free cash flow level of $200.0 million in fiscal 2013. It also expects to generate free cash flow to the tune of $175.0 million in fiscal 2014.

The expected synergies out of the deal, along with other details will be revealed in Actuant’s fiscal fourth-quarter 2013 results to be announced on Oct 1, 2013. The company has a Zacks Consensus Estimate of 50 cents for the fourth quarter of fiscal 2013, representing a year-over-year decline of 9.7%. The Zacks Consensus Estimate for fiscal 2013 stands at $1.87, representing a year-over-year decline of 9.9%.

Actuant currently carries a Zacks Rank #3 (Hold). Other stocks worth a look in the industry are Alamo Group, Inc. (ALG), AGCO Corporation (AGCO) and Barnes Group Inc. (B). While Alamo Group carries a Zacks Rank #1 (Strong Buy), AGCO Corp. and Barnes Group carry a Zacks Rank #2 (Buy).

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