Not every M&A transaction is necessarily positive for investors and we evaluate each based on its individual merits. That is why, earlier this year, when MTS Systems (NASDAQ:MTSC) announced the acquisition of sensor maker PCB Group for $580 million, we decided it was time to exit the stock. In addition to our concerns about execution of the current business, we did not believe the strategy behind the acquisition was solid. It added to the company’s existing sensor business, where the company does not enjoy a strong competitive advantage, and it diluted MTS’s durable competitive advantage in its core test business while adding substantial leverage to the balance sheet.
From Mairs & Power Growth Fund third quarter 2016 commentary.
This commentary includes forward-looking statements such as economic predictions and portfolio manager opinions. The statements are subject to change at any time based on market and other conditions. No pre-dictions, forecasts, outlooks, expectations or beliefs are guaranteed.
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