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."

ITW, others respond to Japan disasters

Supply chain companies support humanitarian efforts, keep tabs on situation in Japan following earthquake and tsunami

Uncertainty still looms about the long-term effects of Japan’s recent natural disasters and ensuing nuclear crisis on the global supply chain. Product shortages, higher prices, and logistics problems threaten some industries, such as electronic component manufacturing and distribution, as others wait to see if there will be a trickle-down effect from production slow-downs in industries such as automotive and technology. In the meantime, many manufacturers and distributors remain focused on the humanitarian efforts needed to help Japan recover.

Diversified manufacturer ITW recently donated $250,000 to the Red Cross Japan Earthquake and Pacific Tsunami Fund and said it will provide a 3 to 1 Matching Gift Program for employee donations.

In a similar move, electronics distributor Arrow Electronics, recently pledged to match its employees’ first $100,000 in donations to designated crisis-recovery charities at work in Japan.

Also in the electronics distribution space, British giant Premier Farnell was the first to launch an informational micro-site devoted to the Japan tragedies on its element14 online community. The site includes updates from electronic component manufacturers located in Japan, as well as those that source products from Japan, along with news, humanitarian support information, and discussion forums.

Distributors of electronic components are watching the situation carefully, since Japan produces a large portion of the world’s semiconductors and related items. Roughly 40% of the world’s NAND flash memory and 15% of its DRAM are produced in Japan, for example.