Volvo Construction Equipment (Volvo CE) announced an agreement with Terex Corp. to acquire the hauler manufacturer Terex Equipment Ltd., including related assets and intellectual property. The deal, which is subject to regulatory approval, includes the main production facility in Motherwell, Scotland, and two product ranges that offer both rigid and articulated haulers. It also includes the distribution of haulers in the U.S., as well as a 25.2% holding in Inner Mongolia North Hauler Joint Stock Co. (NHL), which manufactures and sells rigid haulers under the Terex brand in China.
|Volvo CE’s $160 million purchase of Terex Equipment Ltd.’s hauler product line will give the Swedish truck builder five models of rigid haulers and three additional articulated hauler models.|
Volvo CE’s president, Pat Olney, said, “This is a strategic acquisition that offers Volvo CE considerable scope for growth. The addition of a well-respected range of rigid haulers extends the earthmoving options for customers involved in light mining applications.”
In 2012, the businesses in the acquisition (excluding NHL) had net sales of approximately $370 million (SEK 2.5 billion) and an operating income of approximately $33 million (SEK 220 M). In the first nine months of 2013, net sales amounted to approximately $172 M (SEK 1.1 billion) and operating income was approximately $5.5 million. The purchase consideration amounts to about $160 million on a cash and debt free basis. The acquisition will increase the Volvo Group Industrial Operation’s net financial debt by SEK 1 billion.
The acquisition includes five models of rigid haulers, with payloads ranging from 32 to 91 tons. Volvo CE said introduction of rigid haulers will extend its position in light mining; an industry area that is complementary to general construction, oil and gas, aggregates and quarrying, and road building—segments that Volvo CE is already active in.
The deal also sees a further three models of articulated hauler added to the Volvo portfolio, with payloads ranging from 25 to 38 tons. These machines support Volvo CE’s established position in the articulated hauler segment, offer an extensive field population and opportunities for considerable growth in emerging economies.
If approved, the acquisition adds some 500 employees to Volvo CE’s existing workforce. It also allows for the continued use of the Terex brand name on the relevant machines for a transitional period.
The transaction is expected to be finalized during the second quarter of 2014.