Diversified manufacturer Illinois Tool Works Inc. (ITW) expects its revenue from business acquisitions will fall by more than half this year.

The company said business owners are increasingly reluctant to sell when sales and profits are falling in a slumping economy. They figure to fetch better selling prices when their companies' performance improves.

As a result, ITW said it expects acquired revenue in a range of $400 million to $600 million for 2009, down from $1.5 billion in 2008 from 50 purchases.

"Based on what we see today, that's why we have a relatively small number (for 2009) compared to 2008," David Speer, Chairman and CEO, told Wall Street analysts during a conference call. "The acquisition world is a bit hard to predict."

ITW's stock fell 3.15%, or $1.10, to $33.80 a share.

Accelerating ITW's acquisition pace has been a key initiative of Mr. Speer's since becoming chief executive in 2005. Many of the 800 or so companies ITW operates are in slow-growing industries, making revenue from purchases a vital component of the Glenview, Ill.-based conglomerate's growth strategy.

ITW on Thursday slashed its 2009 outlook and offered a first-quarter forecast below Wall Street's estimates.

The company anticipates 2009 earnings from continuing operations of $1.84 to $2.48 a share, with revenue declining 6% to 12%.

For the first quarter, it sees earnings per share of 26 cents to 42 cents a share, with revenue plunging 11% to 17%. Analysts were expecting earnings per share of 47 cents.

With business concentrations automotive parts and construction products, ITW has faced the full force of recessions in the United States and Europe.

Fourth-quarter net income tumbled 50% to $233.8 million, or 46 cents a share, down from $470.7 million, or 87 cents a share, a year earlier. Revenue slipped 5.9% to $3.68 billion, with the unfavorable currency-exchange rate contributing 4.5 percentage points to the decline.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com

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