Graco Inc. (NYSE: GGG) announced today the scheduled closing of its previously-announced $650 million acquisition of the Illinois Tool Works Inc. (NYSE: ITW) finishing businesses for April 2, 2012. The Company has reached an agreement with the United States Federal Trade Commission (“FTC”) that will allow for closing to occur while the FTC investigates and considers a settlement proposal from Graco.
The acquisition was first announced on April 14, 2011 and includes complementary powder and liquid finishing equipment operations, technologies and brands. In powder finishing, Graco will add Gema®, a global leader in superior powder coating technology (the “Powder Finishing” business). In industrial liquid finishing, the acquisition includes Binks® spray finishing equipment, DeVilbiss® spray guns and accessories, Ransburg® electrostatic equipment and accessories and BGK curing technology (excluding Powder Finishing, collectively known as the “Liquid Finishing” businesses).
Since Graco originally filed its required notification pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act"), on May 2, 2011, the Company has been cooperating with the FTC in its review of the acquisition. On December 15, 2011, the FTC formally filed a complaint to challenge the acquisition on the grounds that the addition of the Liquid Finishing businesses to Graco would be anticompetitive, which Graco has denied.
In an effort to complete the transaction in a timely manner, Graco has proposed a settlement to the FTC. Details of the settlement proposal were not disclosed. The FTC has indicated that the investigation and consideration of Graco’s settlement proposal will require time beyond the scheduled closing date of April 2, 2012. The FTC will take no action to block the closing, but has issued an order for Graco to hold the Liquid Finishing assets separate from Powder Finishing and other Graco businesses.At the completion of its review, the FTC will issue a final decision and order that will identify the products, businesses and/or assets that Graco will be required to divest. Such divestiture must be completed in the 180 days following the issuance of the final decision and order. Graco does not expect that it will be required to divest any businesses or assets outside of Liquid Finishing, although the required divestiture may include a portion or all of the Liquid Finishing businesses.
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