ITW Acquires Panreac Group - Analyst Blog

Illinois Tool Works Inc. (ITW) recently acquired Europe-based chemical company, Panreac Group. The terms of the transaction were not disclosed. Panreac Group serves particularly the laboratory, pharmaceutical, cosmetic and food industries.

 

The acquired company, founded in 1941, employs roughly 230 employees and will operate as a part of Illinois Tool’s Performance Polymers & Fluids. The acquisition will help Illinois Tool to expand its operations in countries like Italy, France and Portugal.

 

Illinois Tool Works, operating through 840 business units in 57 countries, is one of the leading manufacturers of industrial products and equipment.

 

The company in the second quarter of 2010 reported earnings per share of 83 cents, which was up 131% year over year and in line with the Zacks Consensus Estimate of 83 cents. Operating revenue grew 20.1% year over year to $4,076.3 million, compared with $3,392.9 million in the second quarter of 2009.

 

For the third quarter of 2010, management offers its guidance for earnings per share from continuing operations which comes to approximately 72–84 cents based on total revenue growth assumption of 9%–13%. For full-year 2010, the company expects EPS to be within the $2.82-$3.08 range based on revenue growth expectations of 11%-13%.

 

In our opinion, the company’s growth stems from its ability to develop new and improved products as well as broadening the range of application of established products. Improvising and developing new methods, processes and equipment along with acquisitions give the company a big push.

 

Moreover, new products are designed to be more cost-effective by eliminating steps in manufacturing processes, reducing the number of parts in an assembly, or by improving the quality of customers’ assembled products.

 

Illinois Tool faces fierce competition from Cooper Industries plc (CBE), General Electric Co. (GE) and Manitowoc Co. Inc. (MTW). We currently maintain our Neutral recommendation on the stock, which is in line with the Zacks Rank of #3 (Hold).