Zacks_Analysts' Blog : FTC Serves Request to Graco - Analyst Blog

The antitrust regulators, the Federal Trade Commission (FTC) served a request on Graco Inc. (GGG) for additional information on the company’s proposed acquisition of finishing businesses of Illinois Tool Works Inc. (ITW).

This acquisition is being investigated under the FTC’s Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, scrutinizing whether the proposed transaction is in compliance with the antitrust laws of the United States. 

Management stated that the company intends to obtain the FTC’s assent for the merger at the earliest and thus, Graco will cooperate with the FTC.

As per the HSR Act, Graco has to wait for a period of 30 days after complying with the request. However, this period can be concluded earlier by the FTC.

In April, Graco announced the acquisition of the finishing businesses of Illinois Tool Works for $650 million. The company will fund the acquisition using a $450 million revolving credit facility and long-term debt of $300 million.

The finishing unit comprises paint spray systems and technologies for a variety of industrial end-markets and applications worldwide. With a team of 900 employees, the finishing businesses generated revenues of $305 million in fiscal 2010.

The operations of finishing businesses are located in the United States, as well as overseas, which help the unit generate 40% of revenues from the Americas and 60% from other places.

This strategic acquisition will expand Graco’s footprint in the international market. Additionally, the company will acquire products complementary to its Industrial segment.

As a consequence of the merger, the company will also acquire the target business’ leading equipment technologies and brands including Gema, Ransburg, DeVilbiss, BGK and Binks.  

Graco expects that the acquisition will create long-term value for the shareholders.

Headquartered in Minneapolis, Minnesota, Graco supplies technology for management of fluids in both industrial and commercial applications. Its products are used for the application of paints and coatings, for high-pressure cleaning of equipment, and the lubrication and maintenance of vehicles and other equipment.