Terex Corp. has agreed to sell its truck business to Volvo Construction Equipment for approximately $160 million. The introduction of rigid haulers will extend Volvo CE’s position in light mining; an industry area that is complementary to its general construction, aggregates, quarrying and road building segments.
The deal also means three additional articulated hauler models will be added to the Volvo portfolio, with payloads ranging from 25 to 38 tons. These machines will support Volvo CE’s already established position in the articulated hauler segment, as well as offering an extensive field population and opportunities for considerable growth in emerging economies.
The deal includes Terex's main production facility in Motherwell, Scotland, and the distribution of haulers in the United States, as well as a 25.2 percent holding in Inner Mongolia North Hauler Joint Stock Co. (NHL), which manufactures and sells rigid haulers under the Terex brand in China.
The sale, which is subject to government regulatory approvals and other customary closing conditions, is targeted to close in the first half of 2014.
"The truck business has been an important part of our company for more than three decades and continues to produce world class products with dedicated and talented employees," said Ron DeFeo, Terex chairman and chief executive officer. "However, trucks no longer fit within our changing portfolio of lifting and material handling businesses. I am confident that the truck business will benefit by joining a company sharing similar competencies and offering complementary products and services. We are pleased to have entered into this agreement with Volvo, which represents a strong strategic buyer for the business who values our distribution network and team members."
DeFeo continued, "The sale of the truck business reflects our strategy to manage our portfolio of businesses and focus on those businesses that provide the greatest returns for our shareholders. We recently announced the initiation of quarterly cash dividends to our shareholders and a share repurchase program and the proceeds from this sale aid our efforts to improve our financial efficiency and implement these programs."
This agreement does not affect the rest of the Terex compact and heavy equipment lines in the Terex Construction portfolio. Terex remains committed to the success of these product lines, as evidenced by several recent significant investments to the remaining lines, including:
- Upgrades to the Crailsheim, Germany, facility for the manufacture of Terex compact excavators and wheel loaders.
- Substantial facility upgrades in Grand Rapids, Minn., to improve the production of Terex compact track loaders and skid steers.
- An upgraded, world-class Bad Schönborn, Germany, manufacturing facility, benefiting Terex Fuchs material handler production.
- A new $4.8 million facility in Canton, S.D., streamlining Terex Bid-Well automatic roller paver production.
- Significant upgrades and lean manufacturing integration at the Fort Wayne, Ind., manufacturing facility for the production of the reintroduced Terex front-discharge mixer truck line.
Commenting on the rationale of the deal 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 at a time of renewed confidence in the sector. The addition of TEL's articulated hauler range will enhance our position in this segment, particularly in high-growth markets. We believe that the Motherwell facility and its global team members, as well as the current distribution partners, are valuable to the success of the business in the future."