Terex’s truck business makes off-highway rigid and articulated haul trucks. Included in the transaction is the manufacturing facility in Motherwell, Scotland.
The sale is targeted to close in the first half of 2014, assuming it passes the competition authorities.
The truck business, called Terex Equipment Ltd, is at the heart of Terex’s roots, since its buyout from General Motors in the 1980s.
“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 CEO.
“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.”
Mr DeFeo added: “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.”
Volvo Construction Equipment 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 Terex Equipment Ltd’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.”
As well as the Motherwell factory, the deal also includes the distribution of haulers in the USA 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. NHL is listed on the Shanghai Stock Exchange.
In 2012, Terex Equipment Ltd (excluding NHL) had net sales of approximately $370m and an operating profit of $33m. In the first nine months of 2013 net sales amounted to approximately $172m and operating profit was $5.5m.
The acquisition includes five models of rigid haulers, with proven designs and payloads ranging from 32 to 91 tons. The introduction of rigid haulers will take Volvo CE into light mining.
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 already established position in the articulated hauler segment, offer an extensive field population and opportunities for considerable growth in emerging economies, Volvo said.
If approved, the acquisition adds some 500 employees to Volvo CE’s existing workforce.
The deal also allows for the continued use of the Terex brand name on the relevant machines for a transitional period.