Wabco Buys Remaining 51% Stake In South African Partnership

Wabco Holdings Inc. (NYSE:WBC) acquired the outstanding 51% stake of its partnership with Sturrock and Robson Industries, Pty Ltd, previously formed in South Africa. With this acquisition, Wabco will build its wholly-owned business known as WABCO South Africa.

The transaction completed on Dec 1, 2017, will enable the company to expand its global portfolio that includes its newly gained product lines in the Sub-Saharan region and perk up its proximity with customers from that area.

The company’s portfolio includes systems for driver assistance, stability control, braking, suspension, transmission automation and aerodynamics.

Wabco Holdings Inc. Price and Consensus

Wabco Holdings Inc. Price and Consensus | Wabco Holdings Inc. Quote

Since 1995, the company has been operating in South Africa through partnership with Sturrock and Robson. Currently, it holds a leadership position in South Africa’s commercial vehicle market with top trailer manufacturers as customers from the country and its neighboring nations.

The new buyout is in line with the company’s strategy to draw synergies from the combined entity across the African continent and use growth opportunities present in the above-mentioned markets. Per management, Wabco will now offer its resources and expertise to the entire continent through its wholly-owned operations.

Apart from the head office, WABCO South Africa’s distribution plus assembly and vehicle testing facility will be in Germiston, situated near Johannesburg. Further, it will be incorporated within WABCO’s Trailer Systems, Off-Highway and Aftermarket Division. As part of this change, the staff strength will increase with 46 new employees joining the company.

Price Performance

Year to date, shares of Wabco have outperformed the industry it belongs to. The stock has surged 36.4% compared with the industry’s 34.6% gain during the period.

Zacks Rank & Other Key Picks

Wabco carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the auto space include BMW AG BAMXF, BorgWarner Inc. (NYSE:BWA) and Cummins Inc. (NYSE:CMI) , all carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BMW has an expected long-term growth rate of 4.2%. Over a year, shares of the company have been up 12.7%.

BorgWarner has an expected long-term growth rate of 9%. In the last three months, shares of the company have been up 16.9%.

Cummins has an expected long-term growth rate of 12.2%. Year to date, its shares have been up 20.7%.

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