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Industrial tool maker, Illinois Tool Works Inc. (ITW - Analyst Report) recently announced a major acquisition of a Chinese food equipment maker that will enable the company to diversify its food equipment portfolio and expand its operations in China as well. Financial terms have been kept under wraps.

The acquisition of Gold Pattern Holdings from private equity firm Actis has added the well-renowned Chinese kitchen equipment manufacturer Vesta to Illinois Tool’s portfolio. Gold Pattern holds 100% of Vesta Global Ltd. which in turn has control of 100% equity stake in Vesta (Guangzhou) Catering Co., Ltd. (Vesta).

Vesta apart from very attractive products that are sold under Justa brand has a solid client base that includes four and five star hotels and chain restaurants.

Acquisition is one of the preferred ways of expansion for Illinois Tool. The company spent nearly $730 million on acquisitions for annualized acquired revenue of approximately $500 million in 2012.

Other strategic initiatives of Illinois Tool aimed at long-term growth include Business Simplification and Strategic Sourcing. The first strategy is expected to bring smaller revenue generation units having common products or line of business under one roof while the second initiative will enable the company to better manage its raw materials and other costs.

Illinois Tool Works currently has a $31.5 billion market capitalization. The stock currently has a Zacks Rank #3 (Hold). Other stocks to watch out for are Kawasaki Heavy Industries Ltd. , with a Zacks Rank #1 (Strong Buy) and Broadwind Energy, Inc. (BWEN - Snapshot Report) and Chart Industries Inc. (GTLS - Snapshot Report), each with a Zacks Rank #2 (Buy).

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