In a board of directors meeting Friday, Illinois Tool Works Inc. -- parent since 1999 of Precor fitness equipment manufacturer -- announced it would divest itself of three consumer businesses, including Precor, as soon as possible.
"We consider Precor to be a very valuable business," John Brooklier, spokesman for Illinois Tool Works (ITW), told SNEWS. "It just doesn't fit with what we really do."
In November 1999, ITW (NYSE: ITW) merged with Premark International, which owned not only Precor but also Wilson Art, a laminate manufacturer, and food equipment manufacturer Hobart Corp., both of the latter sought by ITW, which specializes in business-to-business companies. Precor came along with the package. As a part of its divestiture of all consumer businesses, ITW will also sell West Bend appliances and Florida Tile -- also part of the 1999 merger. According to ITW, revenues in 2000 of the three businesses to be sold were $483 million.
Meanwhile, for Precor, it is business as usual, President Paul Byrne told SNEWS.
"We are as strong as we've ever been," Byrne said a few hours after the announcement. "We've retooled our management team, and we're poised to take it to the next level.
"ITW continues to invest in us, and it is business as usual," he added. "ITW is not walking away from Precor."
Two possibilities exist for an interested buyer, he said: A buyer from within the industry looking for a strategic purchase, or a financial company from outside the industry looking for an investment.
"I think we can continue to prosper under either scenario," Byrne said.
A process like this could take months, Brooklier said, but ITW won't waste any time. He said it expects to select an investment banker/advisor to help with the sale within a week. Then the company will put together the "Book," which will summarize Precor financial and historical data, management team, key products, and the company's future outlook. That book will be given to potential buyers to assist in their purchasing decision.
"We're going to try to get the best price we can," Brooklier said. "And we'd like to do this sooner rather than later."
ITW will restate its financial results for the 2001 fourth quarter and full year to reflect these businesses as discontinued operations, an ITW statement said. The company, with operations in 43 countries and employees numbering 55,300, expects to announce its fourth quarter and full year results on Jan. 29, 2002.
SNEWS View: This could be yet another opportunity for continued consolidation in the fitness industry -- a hallmark of any industry as it matures. Certainly, however, it will take a solid industry player to acquire Precor since the Woodinville, Wash.-based company is not struggling, compared to other companies that have sold of late.