Global Hunter Maintains Neutral Rating, $41 PT on Rowan Companies

Rowan Companies Inc. RDC announced an agreement to sell LeTourneau manufacturing (LTI) to Joy Global JOYG for $1.1 billion with expected deal closure possible in 2Q, Global Hunter reports. “The price seems reasonable for both sides, with RDC now having $875MM in after-tax proceeds to fund its deepwater growth strategy though we expect two or three newbuilds vs. an acquisition and that the subsequent positive impact is unlikely until 2014,” Global Hunter writes. “While negatively impacting our EPS estimates, the deal does not change our valuation. We are maintaining our $41 price target and our Neutral rating.” Rowan Companies closed Monday at $37.96.