Ingersoll-Rand seeks $1 billion in acquisitions
By Industrial Distribution Staff -- Industrial Distribution, 3/1/2000
Woodcliff lake, N.J.-- Diversified manufacturer Ingersoll-Rand Co. plans to spend more than $1 billion on mergers and acquisitions this year to fuel its growth.The $7.6 billion company manufactures heavy construction and mining equipment, industrial machinery and air compressors. Through the first seven weeks of the New Year, the company made two acquisitions and divested in two well-known businesses.
In a significant move for the fluid power industry, it sold its Ingersoll-Dresser Pump unit to rival Flowserve Corp. The $775 million all-cash deal announced in February makes Flowserve the world's second largest pump company, and Flowserve gains a strong share of the growing market for pumps in the water and power business.
Mark Armstrong, Ingersoll-Rand's executive director of corporate development, said the firm has about $1.2 billion to make acquisition deals this year. He declined to comment on pending transactions.
President and CEO Herb Henkel said acquisitions will be a key to increasing diluted earnings per share in the range of $4.00 this year. Ingersoll-Rand plans to continue investing in growth markets of climate control, industrial productivity, infrastructure development and security and safety, he said.
"This earnings target is in line with our goal to achieve a 15 percent compounded annual growth in earnings through 2004," Henkel said in a prepared statement "In addition, we have established a target to achieve compounded annual sales growth of eight-to-10 percent through 2004, at least half of which will be from existing operations. We will derive the remainder of our sales growth over the next five years from acquisitions.
"Based on projected free cash flow of at least $500 million per year, proceeds from divested businesses and additional debt capacity, we expect to have $5.5 billion available to finance our growth through 2004," he said.
The company's most recent acquisition was France-based Sambron S.A. from Fayat Group, a manufacturer and distributor of telescopic material handlers. In mid-February, the firm also acquired the assets of Neal Manufacturing Co., Inc., a manufacturer of road paving machinery and related road development equipment in Carrollton, Ga., to beef up its global infrastructure development unit. Terms of both deals were not disclosed.
Meanwhile, Ingersoll-Rand sold Corona Clipper, a manufacturer of hand tools for pruning and harvesting based near Los Angeles, Calif., to a Spanish firm, Corporacion Patricio Echeverria, S.A. Terms were not disclosed.
The company, which employs about 46,000 people, finished 1999 with net earnings of $545 million, 20 percent above 1998, and full-year diluted earnings per share of $3.29, also a 20 percent increase.
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