Value is in the eye of the beholder

November 3, 2010

After the recent resurgence in U.S. takeover activity, one could easily draw the conclusion that buyers and sellers — separated by a vast gap of value expectations for much of the past two years — were finding some common ground.

But ask the chief executives of top U.S. industrials companies and you’ll hear a variety of opinions on that front, even among those who have closed on takeovers this year.

SPX Corp, which this year has acquired companies including Denmark’s Anhydro and Gerstenberg Schroder, is finding plenty of attractively-priced opportunities, CEO Chris Kearney told analysts on a conference call after the company reported better-than-expected third-quarter resultsĀ .

Chris Kearney“The pricing has changed fairly significantly in the acquisition market,” Kearney said, adding that SPX has focused on deals worth $50 million to $200 million.

“The pricing is attractive, Kearney said. “In the medium term, if the acquisitions market remains as attractive, you might see some more bolt-ons.”

But at United Technologies Corp, CEO Louis Chenevert is still experiencing some sticker shock.

“Right now there is a substantial disconnect between sellers’ expectations and what I’m willing to pay as buyer. That’s where we sit at this point in time and patience is important,” said Chenevert, whose company this year closed on a $1.8 billion takeover of General Electric Co’s security business and last month bought out the 50.1 percent it had not already owner of Clipper Windpower after the wind turbine makers ran into a cash crunch.Louis Chenevert

Chenevert’s still interested in deals — particularly in the fire and security industry, as well as aircraft maintenance operations — but he’s a bit more standoffish.

“I believe there are going to be a couple more additions to finesse the portfolio,” Chenevert told investors at a conference. “From an overall M&A agenda, we have a nice pipeline. I don’t need to do anything that’s substantial at this point in time.”

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