Illinois Tool may boost acquisitions this year

Illinois Tool Works Inc., the maker of Hobart food mixers and Duo-Fast nail guns, expects a better acquisition environment this year that may prompt more purchases than planned, Chief Executive Officer David Speer said.

Illinois Tool, based in Glenview, plans to acquire companies with sales of about $300 million to $500 million this year, and that amount could increase, Speer said at the Barclays Capital Industrial Select Conference in Miami today. So far this quarter, about $200 million has been added to the company's acquisition "pipeline," he said.

The acquisition environment is "beginning to show signs of life again," which could mean more and larger purchases than last year, when Illinois Tool bought 20 companies with $300 million in sales, Speer said.

"The gap between buyer and seller expectations has closed," Speer said. "I think it's easier for people to look at acquiring something today, whereas a year ago you weren't sure whether the business you were looking at was at the bottom and you also weren't sure whether you had the funding to buy businesses."

Typical purchases now under consideration are of companies with about $40 million to $50 million in revenue, instead of the $15 million to $20 million that was normal last year, he said. There is also potential for transactions of $100 million or more in sales, and only one such purchase was made last year, he said.

Illinois Tool gained 56 cents, or 1.2 percent, to $46.01 at 11:07 a.m. in New York Stock Exchange composite trading. The shares gained 38 percent in the 12 months before today.