Friday, April 15, 2011

Graco will buy ITW unit for $650 million in cash

ITW unit had sales of $305 million in 2010

Graco, Inc. is buying the operations of the finishing business of Illinois Tool Works for $650 million in cash.

The ITW business makes and distributes equipment for industrial liquid finishing, powder coating and automotive refinishing worldwide.
The ITW business had revenue of $305 million in 2010.

The deal is expected to close sometime in June.

ITW's finishing business has about 40 percent of its sales coming from North America with significant operations in the United States, Switzerland, the United Kingdom, Japan, Brazil and Mexico. Its brands include Binks, Gema, Ransburg, DeVilbiss and BGK Finishing Systems.

Graco, which makes paint sprayers and fluid-handling equipment, said it plans to operate the businesses on a stand-alone basis and not integrate facilities, sales forces or distribution.

Graco's Chief Executive Officer Pat McHale said, "This acquisition is an excellent strategic fit with Graco's Industrial segment. It will advance all of our stated core growth strategies: new products and technology, geographic expansion, and new markets. We gain a leading position in industrial powder paint equipment – a growing global market where we have no offering today. In liquid finishing, the acquired product technologies are complementary to Graco's Industrial offering and also give us a leading position in automotive refinish where we have little presence. The acquired businesses generate two thirds of revenue outside North America, increasing our critical mass in important international and emerging markets. This transaction will bring several widely recognized premium brands to Graco, a strong distribution channel, an installed base and approximately 40 percent of revenue from parts and accessories."

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