Dover Cuts 2016 Outlook; Wayne Deal Delayed On U.K. Regulatory Review

(RTTNews) - Dover Corp. (DOV), a diversified global manufacturer, said that it cut its 2016 guidance, reflecting weaker capital spending across several industrial end-markets, continued weakness in longer cycle oil & gas exposed markets. The Company also announced that its pending acquisition of Wayne is now expected to close in the first quarter of 2017, driven by the U.K. Competition and Markets Authority's or "CMA" decision to refer the acquisition for a Phase II investigation.

In the pre-market, DOV is currently trading at $67.35, down $4.89 or 6.77 percent.

Third quarter earnings per share is expected to be in the range of $0.81 to $0.83. Analysts polled by Thomson Reuters expect the company to report earnings of $1.02 per share for the third-quarter. Analysts' estimates typically exclude special items.

Full-year 2016 earnings per share is now anticipated to be in the range of $3.00 to $3.05, as compared to prior guidance of $3.35 to $3.45. Analysts expect annual earnings of $3.34 per share. The Company's revised guidance is a $0.38 reduction at the mid-point from the prior forecast, primarily reflecting lower performance, and also includes an expected $0.06 of other costs. These other costs, to be incurred in the fourth quarter, include $0.03 dilution relating to recently closed acquisitions, and incremental deal costs and restructuring charges totaling $0.03.

The Company now expects full-year revenue to decline 4% to 5% compared to a prior revenue forecast of decline 3% to 5%. This revised forecast includes organic revenue of decline 7% to 8%, as compared to the prior organic forecast of decline 6% to 8%. Unchanged from the prior forecast are the Company's expectations for 7% growth from completed acquisitions, a -3% impact from dispositions, and a -1% impact from foreign currencies. The primary factors driving this revision are generally weaker capital spending across several industrial end-markets, continued weakness in longer cycle oil & gas exposed markets, and continued headwinds in our retail refrigeration business related to production inefficiencies.

The company also announced that its pending acquisition of Wayne is now expected to close in the first quarter of 2017, driven by the U.K. Competition and Markets Authority's ("CMA") decision to refer the acquisition for a Phase II investigation. A Phase II investigation can be avoided if the Company offers remedies that resolve the CMA's concerns about the competitive overlap in the supply of fuel dispensers in the U.K. The Company intends to work diligently with the CMA to address those concerns.

Dover's President and Chief Executive Officer, Robert A. Livingston, said, "We are disappointed by the CMA's decision, but committed to actively exploring measures to satisfy the CMA's concerns to resolve this as quickly as possible. This issue relates only to the U.K. dispenser business, which is very small in the context of the wider transaction, and does not change the strategic rationale or economics of the transaction. Nevertheless, the transaction remains subject to the satisfaction of customary closing conditions, including approval by the CMA.