SKF AB, the world’s largest ball bearing maker, agreed to buy Lincoln Industrial Corp., the 100- year-old maker of lubrication pumps, for $1 billion to tap demand for equipment in North America and Asia.
SKF will pay cash for the Missouri company, put up for sale by investment firm Harbour Group, the Gothenburg, Sweden-based company said in a statement. SKF surged as much as 11 percent in Stockholm to its highest in more than two decades, after saying profit rose and increasing its outlook.
Chief Executive Officer Tom Johnstone said he’d been tracking Lincoln for several years before making a move. The U.S. business will add $400 million in sales to SKF’s existing lubrication-tools business as the company branches out from bearings used in washing machines and the car industry.
“Lincoln seems to be a primary competitor in North America, so this is a very interesting, strategic acquisition that expands its market there,” said Soeren Lontoft Hansen, an analyst with Sydbank A/S in Aabenraa, Denmark, who rates SKF’s shares “overweight.”
After having eliminated 6,500 jobs during the crisis that started in 2008, the company’s now benefiting from a global increase in manufacturing, including higher sales of components to the automotive industry in Asia.
‘Uncertainties’
“There are still some uncertainties, but it’s clear the worst is behind us,” Johnstone said in an interview in Stockholm today. “In Asia and Latin America, we have all-time records in sales, but we still have some time to go as a group.”
The price paid for Lincoln is equal to 2.5 times sales. SKF paid 1.1 times sales when it bought a similar business based in Finland four years ago.
Acquiring Lincoln will broaden SKF’s product offering and geographical coverage. Harbour and its investment bankers at Robert W. Baird & Co. aimed to get interest from big industrial companies, including Ingersoll-Rand Plc. An attempt to sell the business in 2008 failed. Lincoln has about 2,000 employees.
“We saw the opportunity for continued growth under our ownership, but we realized that this was a strong strategic fit,” Harbour Chairman and CEO Jeffrey Fox said in a statement.
M&A
The accord also marks a pick-up in acquisitions that’s set to continue, Sydbank’s Hansen said.
Yesterday, Assa Abloy AB, the world’s largest maker of locks, announced a 100 million-euro ($139 million) purchase of a minority stake in Groupe Agta Record, a maker of automatic door systems. That deal may be a prelude to a full-blown merger with its Swiss rival, the Swedish company said.
Munters AB, a Swedish maker of heat exchangers, received takeover bids from Alfa Laval AB and private equity company Nordic Capital, valuing the target at as much as 5.69 billion kronor ($850 million).
SKF’s acquisition announcement coincided with earnings that beat analysts’ estimates and the unveiling of new financial targets. SKF shares gained as much as 16.2 kronor to 168.7 kronor, and traded at 167.8 kronor as of 1:32 p.m.
Earnings Beat
Third-quarter profit more than tripled as sales to automotive and industrial customers continued to recover. Net income jumped to 1.39 billion kronor, or 3.05 kronor per share, from 462 million kronor, or 1.01 kronor.
Profit beat the 1.18 billion-krona average estimate in a Bloomberg survey of 17 analysts. Sales rose 16 percent to 15.5 billion kronor.
SKF raised its financial targets, including increasing its operating margin goal to 15 percent from 12 percent. The margin was 14.9 percent in the quarter, up from 7.2 percent a year earlier.
Johnstone said he plans to hire 1,000 workers in Asia in 2011, adding to the 900 positions the company has added so far this year in that region.
SKF, considered an industrial bellwether for its diverse customer base, was the first among Sweden’s biggest manufacturers to report earnings. Atlas Copco AB, the world’s largest maker of air compressors, and Alfa Laval, the biggest manufacturer of heat exchangers, will post third-quarter reports on Oct. 22. Sandvik AB, the biggest maker of metal-cutting tools, plans to publish earnings on Oct. 29.
Home > WELCOME TO Q&A > 베어링뉴스 
