Fitch downgrades Dover

Fitch Ratings said it downgraded the long-term issuer default rating on Dover Corp. to A- from A and short-term issuer default rating to F2 from F1.

The outlook is negative.

The action follows news that Dover agreed to acquire Wayne Fueling Systems Ltd. for $780 million in cash, or about 10x EBITDA, Fitch said.

Dover had $3 billion of debt outstanding as of March 31, the agency said.

The Wayne acquisition will strengthen Dover's retail fueling business, adding a business with a global presence and significant exposure to North America, Fitch said.

Wayne produces fuel dispensing, payment systems and aftermarket services for retail and commercial fuel stations, the agency said.

The Wayne business complements Dover's Tokheim business, which was acquired in January 2016 for $436 million, Fitch said, and offers similar products primarily to the European market.

The acquisitions of Wayne and Tokheim will push Dover's financial leverage to a pro forma level EBITDA of about 2.7x to 2.8x at the end of 2016, from 2.4x as of March 31, the agency said.

But leverage is expected to improve the low to mid-2x range in 2017, assuming the bulk of free cash flow is again used for debt reduction, Fitch said.

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