Donaldson Co. to acquire gas-turbine filter maker in the Middle East

Donaldson Co. recently agreed to buy a gas-turbine filter maker in the United Arab Emirates that generates just $22 million in annual revenues but offers sizable growth potential and much-desired geographic diversity. The purchase of Northern Technical, a manufacturer of air filter intake systems for gas turbines, is expected to give Bloomington-based Donaldson a new perch from which to manage its existing Europe, Middle East and African gas turbine business.

Northern Technical gives Donaldson more business in the high-growth region and comes with a large and highly coveted replacement filter business for gas turbines in power plants and factories. Donaldson mostly provides filters for new gas-turbine products, despite the fact that replacement parts are more profitable.

Donaldson CEO Bill Cook signed the purchase agreement, terms of which were not disclosed. The deal is expected to close next month following regulatory approval. Tod Carpenter, Donaldson’s chief operating officer, said the acquisition of Northern Technical “reinforces our commitment to growth with a company that is an excellent strategic fit with our existing gas turbine products business.”

Donaldson Assistant Treasurer Rich Sheffer said Northern Technical has a unique product line, which includes static panel filters that Donaldson currently doesn’t make. “So this deal ticks off all three boxes, growth, geographic diversity and product diversity.”

The acquisition of Northern Technical helps fatten one of Donaldson’s smallest divisions. Gas turbine products contributed just $233 million toward Donaldson’s 2013 sales of $2.4 billion. In May, Donaldson reported that its gas turbine product shipments fell 40 percent during its fiscal third quarter and were expected to be down roughly 29 percent for the full year. The sector is expected to rebound in 2015.