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Lincoln Electric Buys Wayne Trail

Zacks Equity Research

Lincoln Electric Holdings, Inc. (LECO) has completed the acquisition of privately held automated systems and tooling manufacturer, Wayne Trail Technologies, Inc. The terms of the deal remain undisclosed.

Based in Fort Loramie, Ohio, Wayne Trail Technologies is a leader in the design and supply of flexible, automated systems for metal forming, metal fabricating and metal joining applications. The company has annual sales of nearly $50 million.

The acquisition is expected to fortify Lincoln Electric’s market leading position in welding automation in North America. The addition will expand the company’s wide range of welding and automated solutions for customers on both the U.S. and international front.

The acquisition was in line with the goals that Lincoln has set to achieve by 2020. Trying to fulfill its myriad commitments, the company is all set to double its market share.

Moreover, it envisions achieving compound annual revenue growth of 10% or more by 2020. Further, the company expects return on invested capital in surplus of 15% through 2020. These achievements will continue to strengthen Lincoln’s position as one of the strongest and successful welding companies worldwide.

The company experienced strong demand for its products in North America in fiscal 2011 and acquired three businesses there during the year, namely, Applied Robotics, Inc. (known by its brand name “Torchmate” in the welding industry), Techalloy Company Inc. and Weartech International, Inc.

These acquisitions complemented Lincoln’s ability to serve global customers in the nuclear, power generation and process industries globally. The recent addition of Wayne Trail Technologies will further add to the product portfolio and serve a wider customer base. Further, these additions will also prove beneficial in helping Lincoln Electric achieve its long-term goals.

Lincoln also has a significant footprint in the international arena. In Russia, the company became the market leader in welding consumables with the acquisition of OOO Severstal-metiz, a subsidiary of OAO Severstal and Mezhgosmetiz-Mtsensk OAO ("MGM"). Apart from that, the company has considerable exposure in Europe, China, India as well as Australia.

We have a long-term Outperform recommendation on Lincoln Electric, which is in line with the short-term Zacks #1 Rank (Strong Buy).

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