Texwipe goes to Illinois Tool Works
07/01/2001
Chris Anderson
UPPER SADDLE RIVER, NJ—The rumor mill is now officially closed: The Texwipe Co. and Illinois Tool Works Inc. (ITW) announced in late May that ITW would purchase Texwipe for an undisclosed sum.
"In order to grow the business, we felt it would be advantageous to search for a strategic partner," says William Paley, president of Texwipe. "After careful consideration, the ITW acquisition provided an excellent opportunity to reach this goal."
While the sale of Texwipe is big news in the cleanrooms industry, the announcement of the sale hardly caught the industry by surprise. Speculation has circulated for months about potential suitors for Texwipe, with both Kimberly Clark and Milliken often cited as companies that could best take advantage of the company's core products of wipers, swabs, sterile and non-sterile cleaning solutions and mops.
 Texwipe's headquarters in Upper Saddle River, NJ. |
That ITW, a $10-billion, 600-company conglomerate with 55,000 employees worldwide, was the eventual winner in the bidding for Texwipe also came as little surprise. Swab manufacturer Coventry and static control equipment maker SIMCO, already ply the waters in the cleanroom industry for ITW, and industry insiders say it is no secret that ITW is interested in adding to its holdings in this market.
"We had heard from the people at ITW that they were interested in building a group of companies to serve the cleanroom market," says Bill Wright, president of Lym-Tech Scientific (Chicopee, MA), a Texwipe competitor.
"The acquisition certainly gives us more critical mass in the wipers and swabs side of the market," says John Brooklier, vice president of investor relations for Glenview, IL.-based ITW. "We believe we can leverage and increase Texwipe's $75 million in sales by marketing its products and providing a wider offering to companies in the industry."
While offering Texwipe products alongside those of other ITW companies is an obvious change in how it approaches the market, much will remain unchanged, Brooklier notes. ITW's management philosophy is firmly rooted in a decentralization of its holdings.
Of the company's 55,000 employees, only 125 work in the company's headquarters. That means Texwipe will continue to operate from its base here and will proceed with business as usual.
"That's what I have heard about ITW," says Jack McBride, chief executive officer of Contec Inc. (Spartanburg, SC). "They tend to buy very good companies and let them run in the same entrepreneurial spirit that brought them success."
Both McBride and Wright are uncertain to what extent having a $10-billion parent company will allow Texwipe to strengthen its hold in the market. "Sure there is always that concern," says McBride. "But in terms of pricing, I don't think they will be able to go much lower at all in many markets, though it seems obvious they will do some bundling with the other companies ITW owns."
But Brooklier provided a glimpse of the company strategy as it applied to other ITW acquisitions. "Once we have completed a purchase we go in and do a complete '80-20' evaluation," he says referring to the rule of thumb that shows 80 percent of a typical company's sales come from 20 percent of its customers. "Then the GM of the business will use what we find to strengthen our business by focusing on our most profitable customers. Many companies talk about 80-20, but we practice it ruthlessly."
Brooklier also indicates that ITW might not be done looking for acquisitions in the cleanroom market. All of which could mean a sharper focus on the cleanroom industry in the future, say both Wright and McBride.
"I think what we are seeing is a mainstreaming of the cleanroom industry and that it is an area where companies like ITW can make an impact and experience significant growth," McBride says.