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Graco on a Growth Spurt

Monday, January 12, 2015

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After a first step a year ago, Graco Inc. is rapidly spreading its wings and turf, with a series of new acquisitions outside its traditional spray-equipment base.

The Minneapolis, MN-based company has announced the acquisition of four companies for $185 million cash to expand its geographical and industry footprint. Those acquisitions follow a fifth one earlier in the fall.

From Solar to UHP Valves

The biggest of the four new deals is the $160 million acquisition of High Pressure Equipment Company (HiP) in Erie, PA, a global producer of valves, fittings and other flow control equipment for ultra-high-pressure industrial environments.

Graco EcoQuip
Photos: Graco Inc.

Rooted in the spray equipment industry, Graco broke into a new market with its acquisition of EcoQuip in 2013. Now, the company has made five new additions in just a few months.

Graco has also taken on Kamas, UT-based White Knight Fluid Handling, which produces pumps, valves, closed-loop systems, pressure vessels, and accessories for the semiconductors, solar and LED products, flat-panel displays and electronics.

In December, Graco closed on the purchase of Brazil-based Multimaq-Pistolas e Equipamentos Para Pintura Ltd., a manufacturer and distributor of finishing products for the metal, leather and wood industries.

The same month, it acquired Ontario-based GeoBlaster Equipment Service and Sales Inc., which makes wet abrasive equipment for coating removal and surface preparation—its second abrasives company purchase in a year.

The combined cash purchase price for the four new acquisitions is about $185 million, Graco said. Terms of the three smaller deals were not announced.

Aggregate sales and EBITDA of the four new businesses in the most recent 12-month period were about $50 million and $17 million, respectively, according to Graco.

'New Markets and Geographies'

"The acquisitions we are announcing today support our strategic growth plans to expand into new markets and geographies, while diversifying our portfolio of precision products for critical applications," Patrick J. McHale, Graco's president and CEO, said in a statement.

Indeed, the company has been expanding past its spray equipment roots, starting with the acquisition of Chesapeake, VA-based abrasive-blasting equipment manufacturer EcoQuip Inc. in December 2013.

Graco is spending $160 million on Erie, PA-based High Pressure Equipment Company, which manufactures equipment for UHP environments, including the oil and gas industry.

Graco also completed the acquisition of UK-based Alco Valves, a manufacturer of high-pressure valves used in oil and gas and other industrial processes, early in the fourth quarter of 2014. The cash transaction closed for £72 million ($109.9 million USD).

The New Additions

HiP designs and manufactures for the oil and gas industry and other UHP environments of 10,000 to 150,000 psi.

Its products are used in numerous industrial applications, including waterjet cutting and cleaning, as well as industrial research programs. The company also maintains a production base in the UK. 

That deal is expected to close in the first quarter of 2015. The acquisition is expected to save Graco about $1.5 million per year in cash taxes through 2029, the company said.

White Knight manufactures a variety of industrial pumps used to transport chemicals and slurries in the production of electronics. That deal should close this month, with "additional consideration" for the current owners if the business hits certain growth targets.

   

Tagged categories: Abrasives; Acquisitions; Construction chemicals; Finance; Geo-Blaster; Spray equipment; UHP waterjetting

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