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Rexnord Acquires Precision Gear Holdings

Zacks Equity Research

Rexnord Corporation (RXN), a well-known mechanical components manufacturer, moved a step further to strengthen its aerospace product portfolio by acquiring assets of Precision Gear Holdings, LLC (PGH). The financial terms/conditions of the transaction have been kept under wraps.

Precision Gear Holdings specialize in manufacturing specialty gears used in the aerospace market along with other industrial markets. With two operating subsidiaries – Merit Gear LLC, located in Antigo, WI, and Precision Gear LLC, located in Twinsburg, OH – Precision Gear Holdings employs roughly 190 people and has an annual revenue generation capacity of $45 million.

The addition of Precision Gear Holdings will widen Rexnord’s product offerings within its Process and Motion Control platform.

Prior to the Precision Gear Holdings acquisition, Rexnord had acquired assets of Micro Precision Gear Technology Limited and LWG Specialised Plumbing Products. While Micro Precision Gear Technology boosted the company’s civil aerospace business, LWG Specialised Plumbing Products gave a fillip to its Zurn brand product sales in Australia.

Acquisitions have helped Rexnord to enter unexplored markets, strengthen its foothold in existing markets and made expansion of product lines easier. In the first half of fiscal 2014, Rexnord spent roughly $34.4 million on acquisitions, up from $21.0 million in fiscal 2013.

Rexnord Corporation is known globally for its specialized process and motion control, and water management products. The company currently provides a year-to-date return of 14.9% and has a market capitalization of $2.4 billion. Earnings growth rate for the next five years is estimated at 27.6%, higher than 23.2% predicted for the industry.

Rexnord Corporation currently carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the industry include EnerSys (ENS), AO Smith Corp. (AOS) and Pioneer Power Solutions, Inc. (PPSI). All three companies hold a Zacks Rank #1 (Strong Buy).

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