Moog Inc. (MOG/A) rose to the highest in more than 25 years after saying it was studying alternatives for its medical-device unit and selling its Ethox Medical business to a private-equity buyer.
RBC Capital Markets will study alternatives for the health-care business, Moog’s smallest, according to a statement today. Moog, whose largest division manufactures aircraft controls, rose 3 percent to $53.05 at the close in New York, the highest since at least February 1988, according to data compiled by Bloomberg.
Dempsey Ventures agreed to buy Ethox for an undisclosed sum, East Aurora, New York-based Moog said today. The sale will result in an after-tax non-cash loss of about $5 million, or 11 cents a share, in the quarter ended June 29, Moog said.
Exiting the medical business reflects Chief Executive Officer John Scannell’s promise to improve margins in the company’s aircraft controls unit, Cai Von Rumohr, an analyst for Cowen & Co. in Boston, said in an interview.
“They sort of asked, ‘Is it worth staying in this business when your main expertise is not selling to hospitals?’” Von Rumohr, who has a buy rating on the shares, said by telephone. “The company has said that they would consider what to do with their medical business in January of next year. So I think this is a little bit early.”
Operating margin in the aircraft controls unit widened to 10.9 percent in 2012 from 9.9 percent a year earlier, helped by higher sales volumes.
Revenue at the medical devices division last year fell 1.7 percent to $140 million, the equivalent of 5.7 percent of the company’s $2.5 billion in total sales. Moog’s aircraft controls unit had $963.4 million in sales last year, a 13 percent increase.
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