* Atlas Copco confident on prospects for Isra Vision after deal

* German company takes Atlas Copco into image-based technology

* Analysts see scope for further M&A at Sweden's biggest company

STOCKHOLM, Sept 9 (Reuters) - Sweden's Atlas Copco believes its expansion into machine vision through one of its biggest acquisitions will pay off despite the disruption caused by the coronavirus pandemic.

Machine vision refers to image-based technology performing tasks from steering robots to inspecting material surfaces for defects. Atlas Copco's $1.19 billion deal for Germany's Isra Vision in February marked its first big push into the area, seen as a central part of further factory automation.

"If you take these two strong trends, automation and in-line quality control, machine vision is a crucial technology in order to achieve that," said Henrik Elmin, head of the Industrial Technique division at Atlas Copco.

"And even though Isra has also been impacted (by the pandemic)....I don't see any logic to why these trends should slow down; rather accelerate if anything," he told Reuters in an interview.

Atlas Copco, Sweden's biggest company by market value, makes compressors, vacuum pumps and industrial tools

Analysts are looking closely at the Isra Vision deal as a first building block for future M&A as well as expansion within digital manufacturing.

Atlas Copco now owns over 92% of Isra and has started a squeeze-out procedure for the remaining shares in the company based in the city of Darmstadt, south of Frankfurt.

PANDEMIC HIT

Isra Vision has much like the rest of the industrial sector been hit by the pandemic, with October-June sales down 19% to 90 million euros ($106 million).

Interest in the plans for Isra Vision is high in light of Atlas Copco's successful recent acquisition campaign in its business area of Vacuum Technique, which has seen growth boom, and now has some 24 billion crowns ($2.7 billion) in annual sales.

"If you look at what they have done in Vacuum, that has been a fantastic story since 2013 in building a growth platform,” Citi analyst Klas Bergelind said.

“And if you look at Isra, short-term you have to integrate the company, but longer term this could also become a growth platform as I think there is a story here where they could do more acquisitions geared towards the industrial segments”.

In Industrial Technique, Atlas has built a broad portfolio of car assembly technologies including adhesives dispensing and self-pierce riveting, and earlier this year expanded in the electronics segment with the acquisition of Scheugenpflug.

Although the machine vision industry is highly fragmented, Isra Vision competes to some extent with firms including Cognex and Perceptron.

Elmin believes Atlas can help expand Isra's global footprint, and sees large potential for its products on a stand-alone basis and also as part of integrated solutions sold through Industrial Technique's other divisions.

"But this is a new pillar, a new growth platform, and that's why we are making it into a division of its own," Elmin said of Isra, which has grown 9% on average over the past decade. ($1 = 0.8460 euros) ($1 = 8.8307 Swedish crowns) (Reporting by Johannes Hellstrom Editing by Keith Weir)