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Actuant Plans to Divest Electrical

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Actuant Corporation (ATU), an industrial products and systems manufacturer, announced its plans to divest one of its segments, Electrical. The move, approved by the board of directors, will be implemented in the third quarter of fiscal 2013, with the segment being classified as discontinued operations. This divestiture is expected to take place during fiscal 2014.

The Electrical segment designs, produces and markets consumables and electrical tools, including electrical meters, connectors and cable ties, for end markets like electrical distribution, power transformation, original equipment manufacturers etc. Popular brands in the segment are Gardner Bender, Del City and A.W. Sperry. 

In the fiscal second quarter of 2013, the Electrical segment generated revenues of $69.9 million, declining 9.3% due to lower solar inverter sales and industrial transformer demand. In the same period, the segment reported an operating profit of $5.1 million, down from $5.8 million in the year-ago quarter due to the benefits derived from the prior year’s restructuring actions.

Actuant initiated the strategy of divesting this segment in order to focus more on the other segments along with better aligning the other segments to the company’s core competencies. Per the company, it will keep on executing the expansion plans and improvement of the Electrical segment till the time of divestiture.

Actuant expects to record a non-cash, after tax charge of roughly $150.0 million due to the write down of the assets held for sale in the fiscal third quarter 2013. In light of the divestiture, Actuant also divulged that the fiscal third quarter 2013 results will not be comparable with the guidance provided in the last quarter.

The proceeds from the divestiture will be used to expand the company through acquisitions as well as increase the returns to shareholders in the form of share buybacks. Actuant currently carries a Zacks Rank #4 (Sell). Other stocks to watch out for in the industry are Lincoln Electric Holdings Inc. (LECO), Broadwind Energy, Inc. (BWEN) and Colfax Corporation (CFX); each carrying a Zacks Rank #2 (Buy).

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