) announced that a proposed order regarding the sale of liquid
finishing businesses has been filed for public comment by the
Federal Trade Commission (FTC).
As per this order, Graco is required to sell the worldwide
liquid finishing businesses that the company acquired from
Illinois Tool Works
) on April 2, 2012.
Graco's management was clearly disappointed with the order. The
FTC will issue its final decision and order that will identify the
products, businesses and/or assets that Graco must divest as and
when the public comment period expires. The divestiture should be
completed within 180 days following the issuance of the final
decision and order.
As announced in April 2012, Graco completed its acquisition of
the finishing businesses of Illinois Tool Works. Though the
deal was closed at $650 million, Graco awaits a final settlement
review from the U.S. FTC.
Meanwhile, Graco added a few equipment and technologies to its
existing product range from this acquisition. This included Germa
for its Powder Finishing along with Binks spray, DeVilbiss spray
guns, Ransburg electrostatic devices and BGK curing technologies
with its various accessories for its Industrial Liquid
On March 27, 2012, the FTC allowed the acquisition to close on
the condition that the Liquid Finishing businesses do not conflate
with Graco's Powder Finishing and other businesses. Graco settled
the issue with the FTC by limiting the conflation of the Liquid
Finishing businesses of ITW, thereby making a provision for it to
remain separately functional under the supervision of a trustee
accountable to the FTC.
Graco's management is upbeat with the acquisition as it would
largely proliferate its distribution scenario in the end markets
along with powering the company with the long-term technological
We maintain our Neutral recommendation on Graco. In the short
run, we have a Zacks #2 Rank on the stock, which translates into a
short-term rating of Buy.
GRACO INC (GGG): Free Stock Analysis Report
ILL TOOL WORKS (ITW): Free Stock Analysis
To read this article on Zacks.com click here.