Rockwell Automation has completed the acquisition of Mestech Services, for an undisclosed amount. The deal is intended to enhance the products and services Rockwell provides to its customers in the industrial automation and information areas. Below, we describe the company and discuss its new valuation.
Rockwell Automationfounded in 2001, is a US company considered to be the world's largest industrial automation and information company.making its customers more productive and making the environment more sustainable.
The company employs around 23,000 professionals in more than 80 countries, but is headquartered in Milwaukee.
With the help of the latest technology and its application to industrial automation, Rockwell is able to develop and deliver solutions to customers for smarter, safer and more sustainable operations in a wide range of industries.
To achieve this, it applies a connected business vision (The Connected Enterprise) thanks to the advances and convergence of plant operations technology (OT) and enterprise information technology (IT).
This connects production lines, field assets, core supplies and enterprise IT to provide contextualised information and action where it is needed, enabling better optimisation and faster response.
Rockwell Automation's business model is divided into two segments:
Focus on key elements of control and information platforms, software applications and automation components.
Among the products offered are:
It includes products as well as solutions and services:
At the beginning of October this year, the firm announced the acquisition of Mestech Services, a leading global provider of manufacturing operations management and manufacturing execution solutions.
It is a Rockwell Automation-recognised systems integrator with extensive experience in the automotive, biotech and consumer goods industries through the application of Rockwell software-based solutions.
According to Rockwell vice-president Matthew Fordenwalt, the deal allows the company to gain expertise in such an important and fast-growing future market as India, so that it can implement and support its customers more effectively.
The company has stated that the transaction is not expected to have a material impact on Rockwell's 2020 financial results.
We analyse below its financial position and future prospects.
Rockwell benefits from the worldwide demand for automation, digitisation and connectivity of production processes.
The keys to the growth of this demand are to be found in China's industrial development and the automation needs of industries such as the automotive, logistics and food & beverage sectors. However, due to the current economic situation, these sectors are suffering, which slows down their demand for automation and could lead to a stabilisation or even a slight decrease in sales growth.
EBITDA, EBIT and net profit figures are in line with the nature of the business, characterised by high margins and high R&D expenditure.
As for the company's balance sheet, no major changes were apparent and most items continue at a stable pace in line with the company's situation. It is worth noting the decrease in equity due to the share buyback carried out by the company through treasury.
Rockwell's multiples are within its historical average and in line with those of the sector, which seems to indicate that it is currently correctly valued.
Similarly, it can be seen in its share price, which, despite the volatility it has experienced, has remained stable in recent years at around $170-160 per share.