Toronto, ON — SKF has agreed to acquire US-based lubrication systems provider Lincoln Holdings Enterprises Inc. for US$1 billion on a cash and debt-free basis from Harbour Group, a privately owned operating company based in St. Louis, MO, USA. The transaction is subject to relevant regulatory approvals.
The acquisition of Lincoln Holdings Enterprises Inc. (known as Lincoln Industrial) includes all Lincoln, Alemite and Reelcraft entities and brands.
“Lubrication systems is a very important business for SKF and also one of our technology platforms,” said Tom Johnstone, president and CEO of SKF. “Combined with our other platforms, it enables us to help our customers reduce friction and energy consumption.
“SKF has been building its lubrication systems business over a number of years and our team has done a great job in developing this as an important part of the SKF Group. The acquisition of Lincoln Industrial combined with our existing business will significantly improve our ability to further support our customers with even better solutions and give us a better geographical coverage.
“We have been following the development of Lincoln Industrial over a number of years and I am very pleased that the Lincoln team will soon be joining the SKF Group.”
Lincoln Industrial designs, manufactures and supplies highly engineered lubrication systems, tools and equipment. The company is headquartered in St. Louis. For more than 100 years, the Lincoln Industrial brands, incorporating Lincoln, Alemite and Reelcraft, have been closely associated with lubrication.
Lincoln Industrial’s three main product lines are automated lubrication systems, hose reels and grease guns, with a focus on grease-based systems. Sales are mainly generated from automated lubrication systems and related products. Major end markets include industrial, energy, off-highway, mining, agriculture and steel.
The company has a global footprint with around 50% of its sales generated in North America, 25% in Europe and 20% in Asia Pacific. The company has around 2,000 employees with manufacturing operations in the US, Asia and Europe. In 2010, Lincoln Industrial is expected to generate sales approaching USD 400 million with an operating profit margin of around 24%.
Lincoln Industrial is highly complementary to SKF’s existing lubrication systems business, with limited overlap when it comes to geographical sales coverage, technology and manufacturing footprint, in particular in North America and Asia. In addition, it provides SKF with improved access to the lubrication tools and equipment aftermarket in North America.
SKF expects to achieve significant synergies from the combination through improved sales opportunities and greater efficiencies.
“We are very pleased that SKF has acquired Lincoln Industrial and look forward to fully supporting the further development of the Group,” said Bart A Aitken, president and CEO of Lincoln. “Lincoln Industrial has developed very well over a number of years with very strong growth and financial performance. The combination of Lincoln Industrial with the current SKF lubrication systems business and customer base will provide significant growth and value creation opportunities.”
The transaction will be accretive and paid through existing cash and credit facilities upon closing.