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Ingersoll Rand Shares Jump on Bobcat Sale Price

Reuters
Watch Berkshire

Shares of Ingersoll-Rand jumped as much as 8 percent in early trading on Monday after the diversified manufacturer got a much-higher-than-expected price for its Bobcat machinery division.

Ingersoll said on Sunday it had agreed to sell the Bobcat division and two other units to South Korea's Doosan Infracore for $4.9 billion, marking the biggest-ever foreign acquisition by a South Korean firm.

The Bobcat division and its utility equipment and attachment units generated $2.6 billion in sales last year, accounting for about 23 percent of Ingersoll-Rand's total 2006 revenue.

The sale price was about 20 percent higher than expected, Wall Street analysts said.

Deutsche Bank analyst Nigel Coe had estimated a $4 billion price, given the decline in Bobcat earnings over the past four quarters.

"The $4.9 billion price ... will surprise most investors to the upside," Coe wrote in a research note Monday.

Political opposition to the deal is not likely, given close ties between the United States and South Korea, the analyst added.

Bear Stearns' Ann Duignan had also estimated a $4 billion sale price.

Ingersoll-Rand shares were up $2.19 to $50.33 in morning trade on the New York Stock Exchange after rising as high as $51.97 in early dealings.

The shares fell more than 4 percent on Friday after the Bermuda-incorporated company said U.S. authorities were looking into its past tax filings.

Citigroup analyst David Raso on Monday raised his rating on the shares to 'buy' from 'hold' with a $57 price target. He said the company's second-half earnings forecast "looks beatable," adding that investors may not realize how favorable the company's geographic balance has become.

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