Atlas Copco to Acquire Klingel Joining Technologies by 2Q18

Atlas Copco AB ATLKY yesterday announced that it will acquire Germany-based Klingel Joining Technologies. Financial consideration of the buyout has not been disclosed. This buyout deal follows the company’s acquisition of Walker Filtration Ltd. on Mar 1.

Klingel Joining Technologies, specializing in flow drill technology — a mechanical joining process — primarily operates in the automotive industry. The to-be-acquired assets are a business arm of Klingel GmbH. In 2017, Klingel Joining Technologies generated revenues of €8.5 million.

In the last three months, Atlas Copco’s American Depository Receipts have yielded 0.3% return, outperforming 0.1% decline recorded by the industry.

Details of the Buyout

As noted, Klingel Joining Technologies will strengthen Atlas Copco’s joining technologies business, enhance its technological know-how required in the automotive industry and provide easy exposure to automatic screw feeding equipments. In addition, 23 skilled employees of Klingel Joining Technologies will work for the company.

Klingel Joining Technologies will be integrated with Industrial Assembly Solutions division — part of Atlas Copco’s Industrial Technique business area.

Pending shareholders approval, the buyout will likely be completed in the second quarter of 2018.

Atlas Copco’s Inorganic Initiatives: A Boon

The above-mentioned transaction is consistent with Atlas Copco’s policy of acquiring meaningful businesses to gain access to new customers, regions and product line. Earlier in March, the company acquired Walker Filtration Ltd., a British company engaged in making equipments used in the treatment of compressed gas, vacuum and air. The acquired assets will enhance the company’s medical-gas business in the Compressor Technique business area.

In February, the company completed the acquisition of Australia-based Hy-Performance Fluid Power Pty Ltd. It will be integrated with the company’s existing Mining and Rock Excavation Technique business. In January, the company closed the buyouts of French company Location Thermique Service SAS, U.S.-based mining equipment distributor Cate Drilling Solutions LLC, Australia-based Rockdrill Services Australia Pty. Ltd. and South Africa-based mining consumables provider Renegade Drilling Supplies Proprietary Ltd.

Also, Atlas Copco believes in disposing of non-core assets to enhance its business opportunities from the profitable ones. In this regard, the company’s divestment of its concrete and compaction operations, from the Power Technique business to the Construction division of Husqvarna Group in February 2018, is worth mentioning.

Zacks Rank & Key Picks

With a market capitalization of nearly $49.4 billion, Atlas Copco currently carries a Zacks Rank #3 (Hold). Earnings estimates for the stock for 2018 have been increased by one brokerage firm in the last 60 days. It is pegged at $1.97, reflecting growth of 1.5% from the tally 60 days ago.

Atlas Copco AB Price and Consensus
 

Atlas Copco AB Price and Consensus | Atlas Copco AB Quote

Some key players in the industry, sporting a Zacks Rank #1 (Strong Buy) are Applied Industrial Technologies, Inc. AIT, Dover Corporation DOV and Roper Technologies, Inc. ROP. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last 60 days, earnings estimates for each of these stocks have improved for the current year as well as the next year. Also, average positive earnings surprise for the last four quarters was 10.97% for Applied Industrial, 7.26% for Dover and 3.12% for Roper.

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