Bloomberg News

Graco Wins Conditional FTC Approval for ITW Acquisition

March 27, 2012

Graco Inc. (GGG), a paint equipment manufacturer, won conditional approval from the Federal Trade Commission for its proposed $650 million acquisition of Illinois Tool Works Inc. (ITW)’s ITW Finishing LLC unit.

The FTC, which sued in December to block the deal, ordered Graco to hold off from combining certain units of ITW Finishing while it decides what divestitures it may require to protect competition in the industry, the FTC said today in an e-mailed statement.

Graco, based in Minneapolis, has proposed a settlement to the FTC, the company said in a statement today.

“We are looking forward to moving this transaction on to the next phase, although the final structure remains under consideration and will be impacted by requirements imposed by the FTC,” said Patrick J. McHale, Graco’s chief executive officer.

In its administrative action last year, the FTC claimed the deal would reduce competition and lead to higher prices in the liquid-finishing equipment industry. ITW’s liquid-finishing equipment businesses operate under brands including Binks, DeVilbiss, Ransburg and BGK. The FTC withdrew its challenge March 13 so it could consider a settlement.

The order to continue operating the liquid-finishing units separately allows Graco to combine a powder-finishing business sold under the Gema brand, the company said. The order ensures that the liquid-finishing assets remain viable until the necessary assets can be divested, the FTC said.

ITW Finishing and Graco dominate the industry for equipment used to put finishes on products ranging from cars to appliances, according to the FTC, which said the transaction as proposed would end the competition between Graco and Glenview, Illinois-based Illinois Tool, raise prices and create a monopoly in the market for circulation pumps used in automobile plants.

To contact the reporter on this story: Sara Forden in Washington at sforden@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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