Canadian company Toromont Industries has agreed a deal to acquire Hewitt Equipment for a total of CA$1.02 billion (€680 million), the company has confirmed.
In addition to expanding Toromont’s Caterpillar dealership in Canada the deal will boost its already significant equipment rental business, adding the Hewitt Rentals/Location Hewitt operation.
Toromont’s businesses include Battlefield Equipment Rentals - a Cat Rental Store business and the Caterpillar dealership in Ontario, Manitoba, Newfoundland and parts of Labrador and Nunavut.
Hewitt Equipment is the Cat dealer for Québec, Western Labrador and the Maritimes, as well as the Caterpillar lift truck dealer for most of Ontario. It also operates a rental operation, called Hewitt Rentals and Location Hewitt.
Under the agreement, Toromont will pay CA$917.7 million (€612 million) in cash, and will issue 2.25 million company shares, said to be worth CA$100 million (€66.69 million), based on a 10-day average.
Headquartered in Pointe-Claire, Québec, Hewitt sells, rents and services the full line of Caterpillar and other products through its six operating business entities: Hewitt Equipment, Atlantic Tractors, Location Hewitt/Hewitt Rentals, Hewitt Material Handling, Montréal Hydraulique and SITECH QM.
The company was founded in 1952, and operates 45 branches across Eastern Canada. It employs more than 2,000 people and is privately held.
Hewitt generated revenues of over CA$1 billion (€670 million) in 2016, with an operating profit of CA$66.4 million (€44.28 million) and net earnings of CA$46.6 million (€31.08 million).
Scott Medhurst, Toromont president and CEO, said, “Acquiring Hewitt marks a very important milestone for Toromont and is beneficial to our customers, employees and shareholders on many levels.
“The Hewitt family has built a world-class organisation throughout much of Eastern Canada over many decades with a strong reputation for quality service among its customers.”
Medhurst added that the acquisition would strengthen its position in the market and said it would invest in people, facilities, technology and rental fleets.
Upon financial close, Toromont’s Caterpillar dealership will operate 120 branches in Nunavut, Manitoba, Ontario, Québec, New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland and Labrador, giving the company one of the largest sales territories in the Caterpillar dealer network.
Toromont said it expected to maintain existing facilities, and added that under its decentralised business model, regional leadership would continue to run their businesses locally.
Toromont will fund the acquisition through existing cash funds, unsecured debt financing of up to CA$750 million (€500.14 million) and the issuance of 2.25 million Toromont shares.
The transaction is expected to close by mid-October this year, subject to the timing of certain regulatory consents.