PhillyInc: Ametek's small acquisitions transformative nonetheless

Big splashy acquisitions get attention because they are seen as "transformative."

Think of Pfizer Inc.'s $68 billion acquisition in 2009 of Wyeth. Or Comcast Corp.'s pending deal that would give it control of NBC Universal.

   Then there's Ametek Inc., which is as far from splashy as you can get.

The Paoli company makes industrial products, such as "air-moving electric motors" and metal analyzers. It also does acquisitions - 24 of them from the start of 2005 through the end of 2009.

None by itself could be considered transformative. So it's tempting to overlook Ametek's announcement late Tuesday that it had acquired

a maker of parts for the medical-device industry that does about $50 million in annual sales.

After all, Ametek generated $2.1 billion in revenue in 2009. But it got there in large part by consuming a steady diet of industrial firms with between $30 million and $100 million in annual sales.

The latest is Technical Services for Electronics, based in Arlington, Minn., which Ametek bought from a Chicago private-equity firm called Pfingsten Partners L.L.C. As is generally its practice, Ametek did not disclose terms of the transaction.

With annual sales of about $50 million a year, TSE generates as much revenue as the four compa-

nies combined that Ametek acquired in 2009. Thanks to its latest Form 10-K filing, we know that Ametek paid $72.9 million in cash for those four companies.

And 2009 was an off year for acquisitive Ametek. It bought six companies for a total of $463 million in 2008 and seven companies for $300.6 million in 2007.

Janney Montgomery Scott analyst James C. Lucas said in a note to investors Wednesday that Ametek had been "relatively quiet on the acquisition front given the disconnect in the market over the last year."

That disconnect was that valuations of all sorts of companies have come down from their lofty heights of a few years ago.

But as Ametek chairman and chief executive Frank S. Hermance said on a conference call with analysts in late April, sellers weren't always willing to part with their companies without receiving a high multiple.

"I think you know us well enough that we just don't do that," Hermance said. "We were very cautious on what we pay. We feel the cardinal mistake you make in acquisitions is overpaying."

TSE marks Ametek's third and biggest purchase of 2010.

   It's hard to tell given Wednesday's market rally if investors liked the TSE deal. But shares of Ametek did close higher at $41.53, up $1.32, or 3.3 percent.