Roper (ROP) Enters Contract to Acquire Denver-Based Vertafore
Roper Technologies, Inc. ROP announced that it entered a contract to purchase Denver, CO-based Vertafore. The aforementioned deal, which is expected to be completed in the third quarter conditioned on certain regulatory approvals, is valued at $5.35 billion in cash. Following the news, Roper’s shares gained 1.5% yesterday to eventually close at $453.18.
Vertafore is a leading provider of cloud-based software solutions, designed for simplifying, and automating the property and casualty insurance lifecycle. Notably, the company’s services are used by more than 20,000 agencies as well as 1,000 insurance carriers in North America for streamlining their processes and improving operational efficiency.
Details of Buyout
Roper expects to fund the transaction with the help of revolving credit facility, new debt and cash on hand. Notably, Vertafore’s brands, name and office sites will remain the same and will run under the leadership of its CEO Amy Zupon.
Roper believes that Vertafore’s efficient management team, solid market position and customer retention policies will be beneficial. The buyout will help generate revenues of $590 million and EBITDA of $290 million in 2021. In addition, cash accretion is predicted immediately from the buyout.
Other Notable Acquisitions
The above-mentioned transaction is in sync with Roper’s policy of acquiring businesses to gain access to new customers, regions and product lines. Notably, in 2019, the company used $2.4 billion for making acquisitions.
In August 2019, it acquired iPipeline Holdings, a provider of cloud-based software solutions to customers in financial services and the life insurance industry. Also, it added ComputerEase Software to its portfolio in the same month. Apart from this, in April 2019, the company acquired Foundry. It is worth mentioning here that acquisitions had a positive contribution of 2% and 1% of revenue growth in the first and second quarters of 2020, respectively.
Zacks Rank, Estimates and Price Performance of Roper
The company, with $47.5-billion market capitalization, currently carries a Zacks Rank #3 (Hold). It is poised to benefit from strength across its network software and medical product businesses. However, it anticipates the coronavirus outbreak to have an adverse impact on demand for its products and project timings across most of its segments.
In the past 30 days, earnings estimates for Roper have been improved. The Zacks Consensus Estimate for its earnings is pegged at $12.28 for 2020 and $13.18 for 2021, suggesting growth of 1% and 1.7% from the respective 30-day-ago figures.
The company’s shares have gained 25.4% compared with 31.3% growth recorded by the industry in the past three months.
Stocks to Consider
Some better-ranked stocks from the same space are Chart Industries, Inc. GTLS, Altra Industrial Motion Corp. AIMC and Graco Inc. GGG. While Chart Industries sports a Zacks Rank #1 (Strong Buy), Altra Industrial and Graco carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chart Industries delivered an earnings surprise of 10.17%, on average, in the trailing four quarters.
Altra Industrial delivered an earnings surprise of 31.43%, on average, in the trailing four quarters.
Graco delivered an earnings surprise of 8.68%, on average, in the trailing four quarters.
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