MDM News Digest 3414

CE Franklin, Calgary, AB, has entered into a non-binding letter of intent with Smith International, Inc., Houston, TX to acquire all of the common stock of Wilson International, Inc., a wholly owned subsidiary of Smith, in exchange for common shares of CE Franklin issued from treasury. Smith currently holds a 55% interest in CE Franklin. CE Franklin will issue shares between US$245 million and US$250 million. or approximately 66 to 68 million shares of CE Franklin. More...

More consolidation in power tools: Pentair, Inc., Golden Valley, MN, is getting out of the tool business, with a definitive agreement to sell its Tools Group to The Black & Decker Corporation, Towson, MD, for approximately $775 million. Pentair's Tools Group comprises the Porter-Cable, Delta, DeVilbiss Air Power, Oldham Saw, and FLEX brands, among others. The Group employs 4,200 people at facilities in North America, Europe and Asia. Pentair noted that the proceeds from the sale of the Tools Group will be used to pay down debt associated with Pentair's acquisition of WICOR Industries.

The Timken Company, Canotn, OH, has acquired the assets of SES
Technical Group, a division of SES, LLC., as part of a strategy to offer a broader and enhanced range of friction management products and services. The SES Technical Group, Richfield, OH, specializes in vibration analysis, infrared thermography, continuous monitoring systems, wear particle analysis, and 24-hour emergency service. The acquisition of the SES Technical Group will add approximately $2.5 million in revenue to Timken Industrial Services, a Timken subsidiary that works with industrial end users, original equipment manufacturers and distributors globally to offer services such as bearing repair, bearing reclamation, component repair, on-site training, mill maintenance, diagnostic services, and now, predictive maintenance services.

Lincoln Electric Holdings, Inc., Cleveland, OH, has acquired controlling interests in three welding businesses in China. Lincoln owns the majority of a welding equipment manufacturing facility currently under construction in the Baoshan district of Shanghai, together with two welding consumables operations ' a flux-cored wire facility also located in Baoshan and a stick electrode factory in northern China. Annual sales of between $50 million and $60 million are expected for the acquired Chinese entities, in addition to revenues from another welding consumables facility in which Lincoln currently holds a 48% stake. This manufacturing operation, jointly owned with Tenwell and Kuang Tai, had 2003 revenues of $65 million with a leading position in the MIG wire market in China.

Another niche distribution software company is acquired. Speedware Corporation Inc., Montreal, Quebec, an enterprise software solutions and productivity tools provider, has agreed to purchase Prelude Systems, Inc., Dallas, TX, a 20-year provider of enterprise software solutions to the distribution market. Prelude has estimated revenues of $14 million, with a strong customer base in several MRO and hardgoods distribution sectors, including pool supply, industrial, automotive parts and consumer products.

May U.S. machine tool consumption was up nearly 10% from April to $224.30 million, according to the American Machine Tool Distributors' Association, and the Association For Manufacturing Technology. This total, as reported by companies participating in the USMTC program, was up 9.9% from April and up 54.2% from the total of $145.42 million reported for May 2003. With a year-to-date total of $1,041.37 million, 2004 is up 46.1% compared with 2003.

MSC Industrial Direct Co., Inc., Melville, NY, reported net sales for the third quarter ended May 29, 2004 increased 18.4% to $255.3 million, compared to net sales of $215.6 million in the third quarter

of fiscal 2003. Net income for the third quarter of fiscal 2004 was $23.9 million, an increase of 81.3%, compared to net income for the third quarter of fiscal 2003 of $13.2 million. There was one more day in this year's third quarter than in the third quarter of last year. For the first nine months of fiscal 2004, the company's net sales rose 11.4% to $708.6 million, compared to net sales of $635.9 million in the year ago period. Net income in the first nine months of fiscal 2004 increased 53.4% to $58.9 million, compared to $38.4 million in the first nine months of fiscal 2003.

Fastenal Co., Winona, MN, reported net sales for the six-month period ended Jun. 30, 2004 totaled $594.3 million, an increase of 22.6% over net sales of $485.0 million in the first six months of 2003. Net earnings increased from $41.0 million in the first six months of 2003 to $63.0 million in the first six months of 2004, an increase of 53.7%. Net sales for the three-month period ended June 30, 2004 totaled $310.1 million, an increase of 24.5% over net sales of $249.1 million in the second quarter of 2003. Net earnings increased from $21.9 million in the second quarter of 2003 to $34.8 million in the second quarter of 2004, an increase of 58.9%. During the first half of 2004, Fastenal opened 127 new sites. The 127 new sites in 2004 represent 9.7% more stores since Dec. 31, 2003. There were 5,297 site employees as of Jun. 30, 2004, an increase of 9.6% from Dec. 31, 2003 and 12.9% from Jun. 30, 2003.

W.W. Grainger, Chicago, IL, reported second quarter sales were $1.3 billion, up 7% versus the prior year's second quarter. Net earnings were up 19% to $66.6 million, a new quarterly high. Sales for the six months ended Jun. 30, 2004, were $2.5 billion, up 7% versus the first six months of 2003. Net earnings increased 19% to $129 million versus $108 million in 2003. Earnings per share increased 21% to $1.41 from $1.17. Sales in the branch-based distribution segment increased by 7% in the 2004 second quarter. Sales in the U.S. were up 8%, due largely to a strengthening manufacturing sector. Sales in Mexico were up 12% in the quarter, driven by increased telesales and an improving economy. Although the Canadian economy grew in the quarter, Canadian sales were only up 2% (flat in Canadian dollars) because there was no counterpart to last year's sales of safety products related to the SARS epidemic. Sales for Lab Safety accelerated through the quarter, increasing 8% driven by double-digit increases in sales of labware, maintenance and material handling products.