Graco Inc. has agreed to acquire the stock of Pennsylvania-based High Pressure Equipment (HiP) company for $160 million. The acquisition of HiP is subject to customary regulatory review and Graco expects to complete the transaction in the first quarter of 2015. In addition, Graco announced that it has agreed to acquire the Utah-based White Knight Fluid Handling business. The company expects this acquisition to close in early January. Graco also closed on two other acquisitions in December 2014. The company acquired the assets of Ontario, Canada-based GeoBlaster Equipment Sales & Services Inc., and Brazil-based Multimaq-Pistolas e Equipamentos Para Pintura Ltda (Multimaq). Aggregate sales and EBITDA of the four businesses in the most recent twelve month period were approximately $50 million and $17 million, respectively.
“The acquisitions we are announcing support our strategic growth plans to expand into new markets and geographies, while diversifying our portfolio of precision products for critical applications,” said Patrick J. McHale, Graco’s president and CEO.
The combined cash purchase price to acquire the four businesses is approximately $185 million, with additional consideration to the former owners of White Knight Fluid Handling should the business achieve certain growth targets. The acquisition of HiP includes a favorable tax election that is expected to save Graco approximately $1.5 million per year in cash taxes through 2029.
When combined with the acquisition of Alco Valves, which Graco completed early in the fourth quarter of 2014, but before transaction costs and charges related to inventory step-up, these acquisitions are currently expected to provide approximately 13 to 15 cents of accretion to the Company’s earnings per share in 2015.
Headquartered in Erie, PA, HiP designs and manufactures valves, fittings, and other flow control equipment engineered to perform in ultra-high pressure environments, from 10,000 to 150,000 psi. HiP’s products are used on high-value assets in numerous industrial applications, including infrastructure in the Oil & Natural Gas industry and the growing waterjet cutting and cleaning industry, as well as industrial research programs for universities and major corporations. HiP also maintains an engineering and production base in Stoke-on-Trent, Staffordshire U.K.
Headquartered in Kamas, UT, White Knight Fluid Handling manufacturers air-operated double-bellows pumps, air-operated double-diaphragm pumps, and metering pumps. The company’s high purity, metal free pumps are used to deliver, circulate, reclaim, and transport chemical fluids and slurries that are used in the production of semiconductors, solar panels, LED flat panel displays, and various other electronics. White Knight offers an array of highly engineered, rugged, and durable fluid management solutions including pumping solutions used in numerous chemical applications such as dosing, spiking, photoresist, etching, cleaning, and blending.
Based in Dunnville, Ontario, GeoBlaster manufactures wet abrasive blasting equipment for coating removal and surface preparation. The GeoBlaster acquisition augments Graco’s existing protective coating channel.
Headquartered in Porto Alegre, Brazil, Multimaq manufactures and distributes finishing products that serve a variety of industries including metal, wood, and leather. Multimaq is a respected brand in the Brazilian market.
