SKF acquires US based lubrication systems company Lincoln Industrial

SKF acquires US based lubrication systems company Lincoln Industrial

SKF has agreed to acquire US based lubrication systems provider Lincoln
Holdings Enterprises, Inc. for USD 1 billion on a cash and debt free
basis from Harbour Group, a privately owned operating company based in
St Louis, Missouri, USA. The transaction is subject to relevant
regulatory approvals.

Summary

  · The acquisition of Lincoln Holdings Enterprises, Inc. (hereafter
referred to as Lincoln Industrial) includes all Lincoln, Alemite and
Reelcraft entities and brands
  · Lincoln Industrial is a leading supplier of lubrication systems,
tools and equipment, with a consistent record of strong financial
performance
  · Lincoln Industrial has around 2,000 employees and in 2010 the
company 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, Lincoln Industrial 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
  · The transaction will be accretive and paid through existing cash and
credit facilities upon closing

Tom Johnstone, President and CEO of SKF, commented:

"Lubrication systems is a very important business for SKF and also one
of our technology platforms. 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."

 

Description of Lincoln Industrial

Lincoln Industrial is a leader in the design, manufacture and supply of
highly engineered lubrication systems, tools and equipment. The company
is headquartered in St. Louis, Missouri, USA. For more than 100 years,
the Lincoln Industrial brands, incorporating Lincoln, Alemite and
Reelcraft have been closely associated with lubrication, and the company
has remained at the forefront of innovation to meet the most demanding
needs of its customers.

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%.

Bart A Aitken, President and CEO of Lincoln, commented:

“We are very pleased that SKF has acquired Lincoln Industrial and look
forward to fully supporting the further development of the Group.
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.” 

Background and rationale for acquisition

The acquisition of Lincoln Industrial is in line with SKF's strategy and
builds on a series of acquisitions made in the lubrication systems
sector over the last six years. Lincoln Industrial is highly
complementary to SKF's existing lubrication systems business, with
limited product and geographical overlap. The acquisition furthers SKF's
strategy including:

  · improving the lubrication systems platform through Lincoln
Industrial's complementary product portfolio. Lubrication systems is a
key area within the management of friction
  · increasing the geographical sales coverage in North America and Asia
  · expanding the business to the automotive aftermarket in the US
  · expanding the manufacturing operations through Lincoln Industrial's
strong US and Asian manufacturing footprint.

 

Cautionary statement

This document contains forward-looking statements that are based on the
current expectations of the management of SKF. Although management
believes that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such
expectations will prove to have been correct. Accordingly, results could
differ materially from those implied in the forward-looking statements
as a result of, among other factors, changes in economic, market and
competitive conditions, changes in the regulatory environment and other
government actions, fluctuations in exchange rates and other factors
mentioned in SKF's latest annual report (available on www.skf.com) under
the Administration Report; "Important factors influencing the financial
results", "Financial risks" and "Sensitivity analysis", and in this
full-year report under "Risks and uncertainties in the business."

Göteborg, 19 October 2010

Aktiebolaget SKF
(publ.)

 

Tom Johnstone
President and CEO

Teleconference/meeting, see press release SKF Nine-month report 2010,
dated 19 October 2010.

 

 AB SKF may be required to disclose the information provided herein
according to the Securities Markets Act and/or the Financial Instruments
Trading Act. The information was submitted for publication at 08.00 am
CEST on 19 October 2010.  

 

Further information can be obtained from:
Ingalill Östman, Group Communication
tel: +46-31-3373260, mobile: +46-706-973260, e-mail:
ingalill.ostman@skf.com

Marita Björk, Investor Relations
tel: +46-31-3371994, mobile: +46-705-181994, e-mail:
marita.bjork@skf.com

 

 

Aktiebolaget SKF, SE-415 50 Göteborg, Sweden, Company reg.no.
556007-3495,Tel: +46-31-3371000, fax: +46-31-3372832, www.skf.com