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Lincoln Electric's Dual Acquisitions

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Manufacturer and reseller of welding and cutting products, Lincoln Electric Holdings Inc. (LECO), announced that it has acquired an ownership interest in Burlington Automation Corporation and agreed to buy Robolution GmbH. Financial terms of the twin transactions were not disclosed.  

Ontario, Canada-based Burlington Automation, a maker of 3D robotic plasma cutting systems, serves the structural steel, construction, oil and gas and general fabrication markets in North America. Its main products are sold under the PythonX brand.

Nowadays, application of robot-guided cutting operations mainly assists the processing of three-dimensional workpieces. In addition, the unique plasma technique, with its higher accuracy and flexibility, improves efficiency. The technique is also cost-effective and suitable for high quality processing.

Lincoln Electric will benefit from Burlington’s proprietary technology by enabling customers to increase productivity and improve quality. The Burlington acquisition will aid the expansion of Lincoln’s portfolio of automated cutting and welding process, along with strengthening of its automation strategy. Additionally, this will support growth by lowering capital investment and floor space.

On the other hand, the acquisition will help Burlington Automation to continue designing leading manufacturing systems together with providing better service to customers.

Lincoln Electric, which belongs to the machinery industry along with Actuant Corporation (ATU), Flow International Corporation (FLOW) and Kennametal Inc. (KMT), also entered into a definitive agreement to acquire Robolution GmbH, a European provider of robotic arc welding systems. Based outside of Frankfurt, Germany, Robolution serves a number of automotive original equipment manufacturers and Tier 1 suppliers.

The Robolution acquisition will expand Lincoln Electric’s geographic reach in the automation business. Lincoln Electric expects the acquisition to close by the end of this month.

Lincoln Electric reported an 8% year-on-year rise in its third-quarter 2013 adjusted earnings to 86 cents per share. The results also beat the Zacks Consensus Estimate of 84 cents. The company’s continued focus on costs reduction drove the results.

Lincoln Electric will continue to benefit from its acquisition strategy, introduction of new products and long-term growth in key global markets, as well as from recovery in the construction sector.

The company did not provide any specific guidance for 2013 or 2014, but anticipates sluggishness in top line performance, given its end-market exposure, ongoing economic policy uncertainty and global growth forecast.

Lincoln Electric currently carries a short-term Zacks Rank #3 (Hold).

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