Dover Corp (NYSE:DOV) announced recently its plans to spin off its energy business known as Wellsite for production of its oilfield services and equipment. The plans to expand Wellsite as a new publicly traded company are a major development for the economy of the whole Houston region especially for people living in The Woodlands where many Dover’s energy products are offered.
Dover has a product mix that includes; the Artificial Lift, Energy Automation, Accelerated companies, Cook Compression and other strategic business units all based in The Woodlands. Furthermore, Dover has various strategic locations for its Norriseal Wellmark and bearings units all based in Houston.
Sivasankaran Somasundaram, the current president at Dover Energy, is also going to double up as the president and CEO of Wellsite the moment the spinoff is completed in 2018. The new company will have about 3,000 employees with about 400 coming within the Houston region. Robert Livingston, the president, and CEO at Dover Corp. stated that the agreement is a milestone for the entire organization and they intend to transform the firm to have a narrow focus on its core business units.
In the recent past months, Dover has encountered pressure from its shareholder activists who demanded that the firm should shed of its energy business unit which, according to them was dragging the company down financially due to the recent increase in the global oil prices, but since the energy sector is slowly recovering, the spinoff can proceed well.
According to the market analysts, Wellsite could be an attractive venture with the Wall Street valuing it at more than $2.2 billion. Wellsite manufactures oil and gas production equipment and the diamond cutters that are used for oil and gas exploration. The spinoff will be entirely tax-free to all the Dover shareholders and will enable the company to focus on expanding its core business units which include; Engineering Systems, Fluid Management, and Refrigeration and Food Equipment.