Domestic mergers and acquisitions decreased 28 percent from October to November, according to S&P Capital IQ, but the transaction values made up for the lack of volume by increasing 21 percent across the same period.
The strong purchasing power capabilities of both financial and strategic buyers, aging baby boomers needing to transition their businesses, and financials needing to exit aging portfolio companies are positive signs for the M&A market. Despite these factors, the future seems as murky as ever.
The fiscal cliff is rapidly approaching and we may have already taken the proverbial plunge before you even read this story.
Regarding corporate buyers, Lincoln Electric Co. snatched up three businesses from ITT Corp. near Charleston, S.C. Applied Industrial Technologies Inc. acquired HyQuip Inc., a 19-employee company that is a distributor of hydraulic, rubber and plastic industrial hose and tubing. Nordson Corp. purchased certain assets of Kodama Chemical Industry Co. Ltd., a licensed distributor for Nordson’s EDI business in Japan. Nordson acquired EDI last June.
Cedar Fair LP, which owns the Cedar Point amusement park, sold Knott’s Soak City in California to SeaWorld. It will become SeaWorld’s third aquatic park in the United States.
Eaton Corp. completed the acquisition of the electrical equipment supplier Cooper Industries plc for $13 billion.
The Riverside Co. made a total of four acquisitions in November. It acquired Digital University, which is the sixth add-on since 2007 to OnCourse Learning. Riverside also purchased Learning Seat, an Australian-based provider of e-learning courses. The other two companies are in the transportation and health care industries.
Finally, Sherwin-Williams Co. announced plans to acquire Mexican competitor COMEX for $2.4 billion.
ALBERT D. MELCHIORRE is the president of MelCap Partners LLC, a middle-market investment banking firm. He is also a director on the ACG Cleveland board. For more information on MelCap Partners, please visit www.melcap.co. For more information about the Association for Corporate Growth, please visit www.acg.org/cleveland.
Deal of the Month
Parker Hannifin Corp. is going out with a bang in 2012 as it completed two acquisitions with combined sales of $215 million in November, earning them the Deal of the Month award.
The first acquisition was Velcon Filters from the private equity firm, The Sterling Group.
Velcon is a niche manufacturer of filtration systems with 300 employees.
Parker’s second purchase was Houston-based PGI International. PGI is manufacturer of specialized, high-pressure flow control components and systems.
PGI has 550 employees and approximate sales of $100 million. This marks Parker’s 13th M&A transaction in 2012. The company has increased its annual dividends paid to shareholders for 56 consecutive fiscal years, among the top five longest running dividend increase records in the S&P 500 index.