Dover Corp. (DOV), a diversified specialized products and components maker, said Thursday its Board has unanimously approved a plan to spin off certain communication technologies businesses into a standalone, publicly traded company. The company expects the spin-off to be completed early next year.
Following the announcement, Dover shares gained nearly five percent in afternoon trade on the New York Stock Exchange.
Dover, based in Downers Grove, Illinois, said it plans to name the spin-off unit as Knowles Corp., which will operate as an independent, global technology firm in the communication technologies space.
The spin off will enable Knowles and Dover to pursue their growth strategies and create significant value for shareholders.
"Consistent with our strategy to create value by identifying and building leading brands and positions in growth markets, we have successfully built Knowles into a great business and an industry-leading enterprise," said Dover Chief Executive Robert Livingston.
Knowles will have significant product breadth in acoustic components, including MEMs microphones, speakers, receivers and transducers, as well as a solid position in communication infrastructure components.
Jeffrey Niew will serve as president and CEO of Knowles upon completion of the spin off. Niew currently heads Dover's Communication Technologies segment.
Dover expects the spin-off in the form of a distribution of 100 percent of Knowles stock, which will be tax-free to Dover and U.S. shareholders. One-time costs associated with the transaction are expected to be in the range of $60 to $70 million.
Knowles, on a pro-forma basis for 2013, will have $1.3 billion in annual revenue, with about two-thirds derived from high-growth acoustic products.
Upon completion of the spin-off, Dover's annual revenue on a proforma basis for 2013, will be about $7.4 billion to $7.6 billion. Dover will have leading positions in its growth spaces, namely energy, refrigeration, fluids, and printing & identification.
Goldman Sachs & Co. is acting as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to Dover
Dover's stock is trading at $79.97, up $3.56 or 4.66%, on a volume of 1.9 million shares.
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