The Federal Trade Commission said Graco Inc. (GGG) may move
ahead with its $650 million deal to acquire Illinois Tool Works
Inc.'s (ITW) finishing business, but must set the liquid finishing
equipment unit aside until the regulator completes a review to
decide which assets must be divested.
The FTC challenged the proposed acquisition in December, saying
the deal would hurt competition in markets for key industrial
finishing equipment. At the time the FTC said the proposed deal
would lead to higher prices and reduced innovation for North
American manufacturers who rely on this equipment.
The commission had alleged that the combined company 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 was completed as planned.
The fluid-handling company, which had denied the allegations,
said it expects the acquisition to close April 2 under an agreement
with the FTC. The company said it doesn't anticipate the FTC will
require it to sell any businesses or assets outside liquid
finishing.
Under the FTC order, the liquid finishing business will be
acquired into a structure that limits its combination with Graco's
other businesses and be run independently by its existing
management under the supervision of a trustee that will report to
the commission.
The liquid finishing equipment businesses operate under the
Binks, DeVilbiss, Ransburg, and BGK brand names.
Graco seeks to acquire the finishing equipment businesses of
ITW, its rival in the manufacture and sale of equipment used to
apply paints and other finishes to a variety of manufactured goods,
such as cars, wood cabinets, and major appliances, according to the
FTC.
Graco shares were up 41 cents at $52.36 and Illinois Tool Works
rose 14 cents to $57.96.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com