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UPDATE 2-Dover to spin off communication businesses
May 23, 2013 / 1:05 PM / in 5 years

UPDATE 2-Dover to spin off communication businesses

* New company would have revenue of $1.3 bln

* Dover to focus on industrial businesses

* Shares rise as much as 5 pct

By Mridhula Raghavan

May 23 (Reuters) - U.S. industrial conglomerate Dover Corp said it plans to spin off most of its communication technologies businesses into a publicly traded company to focus on its industrial businesses, sending its shares up as much as 5 percent.

The businesses, to be folded into the company’s Knowles Corp unit, mainly make microphones, speakers, receivers and other products used in smartphones.

Dover’s other products include industrial pumps, oil and mining drilling tools and food packaging equipment.

“As a standalone business, Knowles will be able to attract a natural set of investors who are much more interested in the consumer electronics space than your typical industrial investors,” Chief Executive Robert Livingston told Reuters on Thursday.

“(The spinoff) clearly brings the focus back inside Dover to our core industrial business, focused around energy, fluids and refrigeration.”

The new company’s brands -- which will include Knowles, Sound Solutions, Dielectric, Novacap, Syfer and Vectron -- is expected to have annual revenue of about $1.3 billion.

Dover bought Knowles Corp, a maker of acoustic products, in 2005 for $750 million.

The company said it would retain businesses in the communications technologies segment that make components for aerospace and defense industries and fluid applications.

“The communication technologies business specifically was not aligned with the industrial profile of Dover,” Ascendiant Capital Market analyst Christopher Bamman said.

Dover said the transaction would be in the form of a 100 percent distribution of the stock of Knowles, which will be tax-free for Dover and U.S. shareholders.

The conglomerate said its annual revenue for 2013 would be $7.4 billion to $7.6 billion, on a proforma basis, upon completion of the deal, which is expected in early 2014. Revenue in 2012 was $8.1 billion.

Dover said it would record one-time costs of $60 million to $70 million related to the transaction.

The expanded Knowles Corp will be headed by Jeffrey Niew, who runs Dover’s communication technologies segment.

Goldman Sachs & Co is financial adviser to Dover, and Skadden, Arps, Slate, Meagher & Flom LLP is the legal adviser.

Dover’s shares, were up 5 percent at $80.08 on the New York Stock Exchange at midday. The stock had risen about 16 percent this year up to Wednesday’s close.

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