Franklin Electric Expands in Brazil with Bombas Leao S.A. Buy - Analyst Blog

Franklin Electric Co. Inc. FELE has acquired Brazilian company Bombas Leao S.A. for an undisclosed sum. However, Franklin Electric expects the acquisition to prove accretive to its 2014 earnings.

The decision to acquire Bombas Leao S.A is a strategic move by Franklin to strengthen its presence in Brazil one of the largest ground water pumping markets in the world and a foundation of the company's developing markets growth strategy. The acquisition will not only complement Franklin's existing Water Systems segment's business but is also expected to expand the company's offering in the submersible pump products market while expanding its distribution reach. Moreover, the acquisition will position Franklin as a leader in the groundwater pumping equipment market of Latin America.

Prior to this buyout, the company had acquired another Brazilian company Motobombas Schneider, a leader in residential pumping systems with an extensive distribution network. This transaction also hints at Franklin Electric's intention of fortifying its presence in Brazil.

Sao Paulo, Brazil based Bombas Leao S.A primarily designs, manufactures and distributes submersible groundwater pumping equipment through manufacturing facilities in Monte Azul Paulista, Teresina and a distribution firm in Recife. In 2013, its net revenue came in at approximately BRL 67 million or about US$ 30 million.

Franklin Electric designs, manufactures and distributes water and fuel pumping systems, worldwide. The company currently holds a Zacks Rank #4 (Sell). Some better-ranked stocks in the sector include Enersys Inc. ENS, ESCO Technologies Inc. ESE and AO Smith Corp. AOS. While Enersys has a Zacks Rank #1 (Strong Buy), ESCO Technologies and AO Smith carry a Zacks Rank #2 (Buy).

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