Textron Buys Stake in Chinese Co.

Textron Inc. (TXT - Analyst Report), through its subsidiary Greenlee, has acquired a majority stake in a Chinese tools and hardware supplier - Shanghai Endura Tools Company Ltd. Textron said it now has 51% interest in the Shanghai, China-based company.

Shanghai Endura Tools Company Ltd. is a provider of hand tools for the home center, construction, industrial manufacturing and automotive channels. Endura has about 140 employees and has been growing its presence in the Chinese tool market since being established in 2004.

Greenlee’s joint venture with Endura gives the company an opportunity to substantially grow its presence in the Chinese tool market. The company hopes to robustly expand its Chinese sales by making use of Endura’s existing network and distribution structure of over 1,100 distributors. Thus, this illustrates an important growth opportunity for Greenlee in China.

Rockford, Illinois-based Greenlee develops high quality innovative products distinguished by customer-driven design and differentiated by supply chain excellence. The company is known as a global leader in the professional tools category.

Textron Inc. is a global multi-industry company that manufactures aircraft, automotive engine components and industrial tools. It is also a provider of solutions and services for aircraft, fastening systems and industrial products and components.

Textron’s diversified presence across commercial, manufacturing and industrial products as well as financing operations protects it from specific business risk. The company is increasingly focused on its core manufacturing business and is gradually exiting from its commercial finance business through orderly liquidation and selected sales.

However, Textron remains exposed to defense spending cuts. Moreover, a slower recovery in the business jet market could lead to deferrals of orders. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock. In the near term, we would advise investors to accumulate its short-term Zacks #1 Rank (Strong Buy rating) peers like Lydall Inc. (LDL) and LSB Industries Inc. (LXU - Snapshot Report).

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