YSI, ITT merger is complete
- Published: September 22, 2011
ITT Corporation completed its acquisition of YSI Incorporated last week for a sum of $310 million, according to ITT spokesperson Laura Brockway. Nothing will change immediately for YSI, which will continue to be located in Yellow Springs under the direction of current president Rick Omler, said Brockway. But according to several YSI shareholders in the village, the value of YSI’s privately held stock has nearly tripled as a result of the merger.
The move is coincident with the division of ITT, an $11 billion company with 40,000 employees worldwide, into three new entities, including ITT, Excelis and Xylem. According to Brockway, Xylem will be headquartered in White Plains, N.Y., (the current ITT headquarters) and will lead several divisions, including ITT Analytics, the umbrella group that has absorbed YSI. ITT Analytics will be based in Woolburn, Mass., and led by President Chris McIntire, while Omler will continue to lead YSI from its current facility in Yellow Springs.
“All parties are very excited about YSI joining the ITT/Xylem family,” Brockway said this week. “Because of YSI’s strong brand recognition and exceptional reputation in the global market, YSI’s name will remain as a prominent brand under ITT, future Xylem, and will continue to operate across all facilities.”
While ITT will focus on the company’s communications business, and Excelis will serve the defense industry, YSI’s current mission ties closely with the vision and culture of the forthcoming Xylem, Brockway said. Both companies have and will continue to develop and manufacture high performance sensors and software to test and monitor water quality, and both will maintain their corporate citizenship programs, including YSI Foundation and ITT Watermark. Xylem will include ITT’s current fluid and motion control business and the analytics division currently used in water, wastewater, environmental, medical and food and beverage applications, according to an ITT press release published on the Wall Street Journal’s marketwatch.com.
According to Omler, YSI began looking for a buyer earlier this year in response to a need for some of its shareholders to cash out their assets. The shareholders included nonprofit holders, retired employees, universities and colleges. According to former employee Susan Miller, who is also the former president of the YSI Foundation, company leaders may have also chosen to sell now partly because they liked ITT. Being proactive about partnering with a buyer of their choosing would have allowed them to avoid being picked up later by the highest bidder at the risk of sacrificing the company’s values, she said.
The acquisition was a boon to both YSI and for Yellow Springs, according to local resident Tom Osborne, a former YSI employee and current shareholder. Before ITT, YSI had 390 employees (including 181 in Yellow Springs) in several facilities in the U.S., Europe and Asia, with a total revenue of $101 million in 2010, according to a press release from ITT. According to Osborne, the company had estimated in 2009 that its worth, roughly based on the value of comparable businesses, had grown to about $300 a share. So when the sale occurred, Osborne was surprised to see the stock had been valued at a little over $780 a share.
Company leaders were traveling this week and were not available for comment, but according to a letter from former YSI president Malte von Matthiesen in last week’s News, the Employee Stock Ownership Plan accounted for over 35 percent of YSI’s shares. Ohio University was the largest minority shareholder, with about 12 percent of the stock, followed closely by Antioch College, with another 12 percent, the letter stated. Osborne estimated that the college held about 15,000 shares, which would be worth almost $12 million. And other individuals such as von Matthiesen himself and other retired employees also owned part of the privately held company, the letter stated.
Most importantly, Osborne said, both YSI and ITT will realize a huge opportunity from the acquisition. The fact that both companies specialize in the same industry will allow them both to acquire new knowledge, develop newer products and grow together, Osborne said. ITT wouldn’t have invested so heavily in a new company unless its leaders were going to grow it, he said. What they got in YSI was a mature, well-established business with a lot of knowledge.
“There’s a great opportunity for synergism there,” he said.