3/4/2011 1:50:00 AM
NEWS BRIEFS
Eager for Acquisitions, Is Buffet Eyeing Fastener Industry?

Warrent Buffet is looking to make some sizable acquisitions, and some reports suggest he may be eyeing the fastener industry.
 

The Wall Street Journal reports that Buffet prefers large industrial businesses with “near-monopoly positions and solid sales growth,” along with pretax income of $75 million or more and market values ranging from $5 billion to $20 billion.
 

“The beauty of Berkshire Hathaway Inc. is that it needn’t play by the same rules as other corporate acquirers: The running “float” of some $66 billion from insurance businesses gives Mr. Buffett access to lower-cost capital, all at massive scale,” writes Dennis K. Berman of the Journal.
 

Illinois Tool Works is said to top a list of potential companies Buffet may actually be interested in acquiring, according to the Journal.
 

“This company has long caught Mr. Buffett’s fancy, according to a person familiar with his interest, and a potential deal was bandied about a few years ago,” Berman writes. “If a bit large, it still fits Mr. Buffett’s criteria to a T, housing businesses from furniture lamination to arc-welding equipment that should expand in a secular economic upturn.”
 

ITW’s market cap is set at $26.8 billion, with a 17% return on equity and 18% margins on EBITDA. 
 

Also on the list is Grainger, with its roster of 1.8 million customers in 153 countries, though the Journal notes that company shares have climbed 30% in the past year, “not ideal for a takeover bid.”
 

Grainger has a $9.2 billion market cap and is valued at 9.2 times EBITDA, with 14.1% EBITDA margins.  ©2011 GlobalFastenerNews.com

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