Shares of Invacare
It's perhaps unsurprising that the company's market value got a bump yesterday: Anecdotally, at least, it seems that acquisitions of privately held companies tend to mean a better same-day pop for their public acquirers because there's less information for the public to second-guess and no arbitrage opportunity for traders. Still, this deal holds significant business promise as well.
The acquisition, for one, is expected to boost Invacare's earnings right away -- though only negligibly this year. Next year it's seen adding 2004 revenue of $116 million and $0.25 to $0.30 in 2005 earnings per share (EPS). That latter figure represents a substantial boost to the market's current estimate of $2.80. (Only two analysts were surveyed for the number I found on Yahoo!'s
Also encouraging is that Invacare intends to keep WP Domus' top people on board while using its own sales force to round out geographic holes in its new operations' -- Alber, Aquatec, or Dolomite -- capabilities. All told, this move seems to only improve Invacare's positioning as a company serving an aging global population.
The company has pretty good-looking financials to boot. Following today's move, Invacare now looks slightly rich based on next year's EPS estimates -- but if investors keep jerking the shares around as they have these last 12 months, there may be a good opportunity to look closely at the company waiting around the bend.
Fool contributor Dave Marino-Nachison doesn't own shares of any of the companies mentioned.
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