) is all set to acquire business of Federal Signal Technologies
Group (FSTech), a provider of electronic toll collection and
parking management hardware and software services, from Federal
Signal Corp. The purchase consideration has been fixed at $110
million cash and is subjected to certain adjustments at the time of
Currently, the electronic tolling industry is valued at $3
billion and is growing rapidly. The government agencies have
increased their expenses on roadway infrastructure, construction
and maintenance, which is expected to boost the electronic tolling
industry by 12% annually.
The government will be able to effectively collect tolling and
parking fare from motorists with the combination of FSTech's
solutions for electronic tolling, vehicle identification and
classification, toll management software, license plate
recognition, and parking lot fare collection systems and 3M's
traffic management solutions. 3M has an experience of above 70
years in traffic products, systems and services for transportation
safety, traffic management, vehicle registration and commercial
transportation markets. FSTech offers its technologies through five
business units: IDRIS - vehicle detection and classification
solution; PIPS - fixed and mobile automatic license plate reading
hardware and software; Federal APD - parking management and fare
collection solutions; Sirit - active and passive RFID transponders
and readers; and VESystems - toll account management and violation
processing software and services.
The acquisition is strategically sound for 3M as it will expand
its offerings for the Department of Transportation, the Department
of Motor Vehicles, toll authorities, and law enforcement agencies,
and will increase its core traffic products for motor vehicles and
roadways, and license plate validation materials. Further, the
acquisition is expected to be $0.02 dilutive (on GAAP basis) to
earnings in the first 12 months following completion of the
transaction, scheduled in the second half of 2012. The closure is
subjected to customary approvals and conditions.
3M is globally recognized for its innovations, which are
supported by some of its well-known brands, such as Nexcare,
Post-it, Scotch, Scotch-Brite, and Scotchgard. We believe that
continued capital expenditure with new product launches should
bolster its prospects across most end markets.
However, the company's growth objectives are largely dependent
on timing and market acceptance of its new product offerings,
including its ability to continually renew its pipeline of new
offerings and bring those to the market at acceptable price points.
Further, the results have been impacted by worldwide economic and
capital market conditions.
3M Company, together with its subsidiaries, operates as a
diversified technology company with manufacturing operations spread
over 60 countries worldwide. It has more than 35 business units
organized into six segments: Consumer and Office, Display and
Graphics, Electro and Communications, Healthcare, Industrial and
Transportation, and Safety, Security and Protection Services
Business. The major competitors of 3M are
Avery Dennison Corporation
EI DuPont de Nemours & Co.
Johnson & Johnson
We continue to maintain a Neutral rating on 3M Company for the
long term and a Zacks #3 Rank (Hold recommendation) over the next
one- to- three months.
AVERY DENNISON (AVY): Free Stock Analysis
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3M CO (MMM): Free Stock Analysis Report
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