Two Chicago-based industrial companies have reached an agreement: Dover is selling its winch and crane business to LKQ for $250 million.
Dover, a diversified Downers Grove-based manufacturer with $6.79 billion in 2016 revenue, is looking to streamline its business portfolio. LKQ, which generated $8.58 billion in revenue last year from selling new and used parts to bodyshops, has grown over its 29-year history through an aggressive acquisition strategy. Both companies are among the 35 largest public companies in Chicago.
Under the Warn Industries brand, Dover manufactures and markets hydraulic and electric winches and hoists for the consumer and industrial markets. This business generates income from 130 to 140 million dollars. The winch business will fall under LKQ’s specialty parts business, which generates 13% of revenue, RW Baird analyst Craig Kennison wrote in an Oct. 23 note.
During a recent teleconference, LKQ CEO Dominic Zarcone told analysts that the dealership plans to buy out Dover’s manufacturing operations as part of the sale.
“For a long time, professional (partial) leadership teams have been vertically integrated as part of their strategy,” he said. “This is the first chance to get results. We will only do this in exceptional cases.”
For Dover, the deal is part of a larger strategy to integrate operations. The company manufactures oil and gas production equipment, product labeling equipment, filling station pumps and refrigeration systems. Between 2014 and 2016, the company sold six businesses for a total of $1.1 billion and acquired 17 businesses for $2.9 billion during the same period.
Dover also plans to divest or divest Wellsite, its energy business, by the end of the year. The business is expected to generate $1.02 billion in revenue in 2017, about 70 percent of the energy sector’s revenue, RW Baird analyst Mig Dobre wrote in a September 12 note.
“We are positive about this move as Dover seeks to reduce the overall cyclicality of its business,” Dobre wrote.
Dover CEO Bob Livingston announced on October 19 that Dover plans to cut costs by as much as $40 million “to optimize the size of our company and boost profits.”
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Post time: Jun-20-2023