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Investing.com -- Roper Technologies (NASDAQ:ROP) Inc., an industrial equipment manufacturer and distributor based in Sarasota, Florida, is reportedly considering the sale of its Neptune Technology Group division, according to Bloomberg News. This information comes from sources who wish to remain unidentified due to the confidential nature of the matter.
The company is said to be working with advisers in order to garner interest from potential buyers. These prospective purchasers could include private equity firms. According to the same sources, the Neptune Technology Group division could be worth as much as $4 billion in a transaction.
At this time, discussions regarding the sale are in their early stages. Roper Technologies has not made a final decision and may ultimately choose to retain the unit.
Wolfe Research analyst Brad Hewitt responded to the reports by saying, "if ROP were to sell the business for $4.0bn, we believe that would imply ~16.8x ’25 EBITDA. We believe a high-teens multiple could be appropriate for the Neptune business; for reference, XYL is currently trading at ~17.5x consensus ’25 EBITDA. Note that ROP originally acquired Neptune for $475m in ’03 for ~8x EBITDA when the business was generating ~29% EBITDA margins."
The analyst spoke on a bullish view of the sale, mentioning that a bull could argue that the proceeds from the sale would be utilized for acquisition of similar software assets that may be growing faster than Neptune. He also emphasized the belief that a private equity firm would be the most logical buyer for Neptune.
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