IDEX Buys ERC

Earlier this week, IDEX Corporation ( IEX - Snapshot Report ) acquired gas liquid separation solutions and detection solutions manufacturer ERC from MH Capital Partners II, L.P. (“MH Capital”). Acquisition was completed at a cash consideration of nearly ¥1.65 billion.

ERC, with yearly sales and international consumer base of about ¥2.14 billion, produces state-of-the-art products used primarily in life science, analytical instrumentation and clinical industries. The company shall be incorporated in the Health and Science Technologies (HST) segment of IDEX which would then proliferate the segment to a much higher degree.

IDEX had acquired Precision Photonics Corporation previously for nearly $20 million for the Optics and Photonics platform of the HST segment. Thus, it can be inferred that such strategic acquisitions made by management shall ameliorate the segment incipiently, helping IDEX reach quite a formidable position in the health and science market in the near future.

The company recently reported its first quarter financial results of 2012. The HST segment performed brilliantly, recording about a 35% annual rise in revenues, reaching a whopping $173.8 million in the quarter. It is lucid that such advancements made shall escalate gains from this platform even more in the coming quarters.

However, the company should be wary of the fact that a proactive stance on the acquisition front has been adopted by its competitors too. During mid-April, DXP Enterprises, Inc. ( DXPE - Snapshot Report ) completed the acquisitions of Pump & Power Equipment, Inc., Aledco, Inc. and Force Engineered Products, Inc.

The company currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We also maintain a long-term Neutral recommendation on its stock.