Germany's Duerr To Buy Babcock & Wilcox's Certain Businesses; Stock Up

(RTTNews) - Shares of Duerr AG (DUERF.PK) were gaining around 4 percent in the early morning trading in Germany after the company announced Wednesday that it is taking over the industrial environmental technology business of US company Babcock & Wilcox Enterprises, Inc. (BW).

Duerr, through its US subsidiary, will buy shares in each of the three B&W subsidiaries, Babcock & Wilcox MEGTEC LLC, Babcock & Wilcox MEGTEC Holdings Inc. and Babcock & Wilcox Universal Inc.

The purchase price will be calculated based on the enterprise value of the three B&W companies, which amounts to around 110 million euros.

Subject to the satisfaction of usual antitrust closing conditions and regulatory approvals, closing is expected in the third quarter of 2018. As at March 31, 2018, Duerr had total cash and cash equivalents of 700 million euros and a net financial status of 94 million euros.

The industrial environmental technology business of B&W comprises the MEGTEC and Universal segments. The company expects both segments to achieve combined sales of around 200 million euros in 2018 and will integrate them into its environmental technology division, Clean Technology Systems. This division also expects to achieve sales of up to 200 million euros in 2018.

The acquisition would create a provider of environmental technology systems for industrial exhaust-air purification. Duerr's new segment is targeting sales of up to 500 million euros and an EBIT margin of 6 to 7 % by 2021.

In 2018, EBIT for MEGTEC/Universal is expected to be slightly positive. At Duerr Group level, the MEGTEC/Universal earnings contribution for 2018 will be negative, at around 6 million euros, due to high extraordinary expenses of 11 million euros.

The Duerr Group's EBIT margin is expected to reach 6.7 to 7.2% in 2018, compared to previous expectation of 7.0 to 7.5%; the operating EBIT margin before extraordinary effects should reach 7.4 to 7.8 % as expected before.

In Germany, Duerr shares were trading at 91.38 euros, up 4.22 percent.