Terex to make niche acquisitions
By Murray Pollok22 December 2009
Terex is to use the proceeds of the sale of its mining division to Bucyrus to pay off debts and make acquisitions of niche manufacturers. Terex said the US$1.3 billion sale signified a shift in strategy from being a construction and mining equipment company to a machinery and industrial products business focusing on niche markets.
Ron DeFeo, Terex chief executive officer and chairman, said the deal would substantially cancel out Terex's debts and give it the financial flexibility to invest in its current businesses or to acquire niche manufacturers.
"We're going to refocus this company away from being a classic construction equipment and mining company to being a machinery and industrial product business", said Mr DeFeo, "Where we think we can develop highly successful product niches to build leading product specialists in categories like aerial work platforms".
Mr DeFeo said the company would be able to make acquisitions of specialist businesses to build on its existing niche companies, or invest in developing the existing businesses further. Funds available for acquisitions are limited to $200 million in each 12 month period from June 2009 and from June 2010.
"This is an industry that absolutely should consolidate, but hasn't", said Mr DeFeo, adding that, "We're going to look for number one or number two market positions in niche machines and in industrial product categories" Mr DeFeo said Terex would not be looking for acquisitions "far afield" from its existing businesses.
He said there was an opportunity to buy companies at the bottom of the cycle that had been "beaten down" by the recession.
With the sale of the mining division Terex's current business will comprise aerial work platforms, crushing and screening equipment, cranes and compact construction equipment.