Industrial goods manufacturer Graco Inc. (GGG) recently went on an acquisition spree when it bought four separate companies for an aggregate sum of $185 million. The strategic move was aimed to fuel its growth momentum by expanding its geographical presence in new markets as well as diversifying its product portfolio.
The companies that were purchased by Graco include Pennsylvania-based High Pressure Equipment, Utah-based White Knight Fluid Handling, Canada-based GeoBlaster Equipment Sales & Services Inc., and Brazil-based Multimaq-Pistolas e Equipamentos Para Pintura Ltda. These companies reported an EBITDA of $17 million on an aggregate on revenues of $50 million on a trailing 12-month basis.
High Pressure Equipment offers valves, fittings, and other flow control equipment for the Oil & Natural Gas industry and industrial research programs for universities and major business firms. The company also boasts of an engineering and production base in the U.K. White Knight Fluid Handling provides various air-operated pumps that are utilized to transport chemical fluids for use in the production of semiconductors, solar panels, LED flat panel displays, and other diverse electronic products. The products of theses two companies are a strategic fit for Graco and strengthen its position in the market.
With a portfolio of wet abrasive blasting equipment for coating removal and surface preparation, GeoBlaster augments Graco’s existing protective coating channel business. On the other hand, the acquisition of Multimaq-Pistolas’ finishing products that are used in metal, wood, and leather industries expand the product portfolio of Graco.
The acquisitions are expected to be accretive to Graco in the current year. Together with the Alco Valves acquisition in fourth-quarter 2014, the companies are expected to contribute about 13–15 cents per share to Graco’s overall earnings in 2015.
Headquartered in Minneapolis, MN, Graco is an industrial manufacturer that supplies technology and expertise for management of fluids in both industrial and commercial applications. Graco specializes in making fluid-handling equipment and systems, with one of its best known products being the spray gun used to apply paint to homes, businesses and cars. Its products are used in the manufacturing of a broad range of finished goods worldwide.
Graco currently has a Zacks Rank #3 (Hold). Other stocks that look promising in the industry include Ingersoll-Rand Plc (IR), Illinois Tool Works Inc. (ITW) and DXP Enterprises, Inc. (DXPE), each carrying a Zacks Rank #2 (Buy).
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