Graco to Buy Finishing Businesses From ITW

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Apr 15, 2011
Illinois Tool Works Inc. (ITW, Financial) is selling its finishing equipment businesses to Graco Inc. (GGG, Financial) in a $650 million cash transaction involving two companies with outstanding dividend growth histories. The diversified industrial manufacturer will shed a handful of subsidiaries in the deal, including Gema, Ransburg, and DeVilbiss. Together they brought in revenue of $305 million in 2010. The press release dubs the group as “leaders in wet industrial finishing as well as powder paint equipment and drying technologies,” so they should fit in nicely with Graco, which produces fluid handling systems and components.

ITW plans to use the proceeds from the sale to repurchase shares under its current buyback program.

Shares of ITW are trading at $53.58 (+0.73%) this afternoon, where they feature a 2.54% dividend yield. Illinois Tool Works has raised its dividend every year dating back to 1964, a claim only 18 public companies can make.

Shares of GGG have popped to $44.85 (+3.65%), where they’re approaching their 52-week high of $46.40. At its current level, the stock carries a 1.87% dividend yield. Graco recently raised its payout for the 12th consecutive year.