The Federal Trade Commission has issued a complaint seeking to
stop Graco Inc.'s (GGG) proposed acquisition of rival Illinois Tool
Works Inc.'s (ITW) finishing operations, saying the deal would hurt
competition in markets for key industrial finishing equipment.
The proposed deal would lead to higher prices and reduced
innovation for North American manufacturers who rely on this
equipment, the FTC said. The commission alleges the combined firm
would control a dominant share of the North American market for
liquid finishing equipment and have a monopoly in the market for
circulation pumps used in the automobile industry, if the proposed
merger is completed.
Graco and Illinois Tool manufacture industrial liquid finishing
equipment, which is used to apply liquid finishes to manufactured
products ranging from cars to wood cabinets.
The FTC said it will file a separate complaint in federal
district court in the District of Columbia seeking an order to halt
the transaction temporarily.
In April, Graco agreed to buy Illinois Tool's finishing
operations for $650 million in cash, a deal that would help the
fluid-handling company boost its presence in certain areas.
Shares of Graco slid 2% to $38.23 in recent trading and the
stock is down 3.1% year-to-date. Illinois Tool Works's shares fell
by 9 cents to $45.73 in recent trading and the stock is down 14%
year-to-date.
-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287; nathalie.tadena@dowjones.com;