Volvo buys into road equipment

25 March 2008

Volvo Construction Equipment has agreed to buy Ingersoll Rand's road building equipment business for US$ 1,3 billion (€ 974 million) in cash. The division makes soil and asphalt compactors, pavers and milling machines and had sales of US$ 864 million (€ 648 million) last year. The deal also includes Ingersoll Rand's US-built telescopic handler and rough terrain forklift truck ranges.

Besides acquiring the product line and factories in China, Germany, India and the US, the deal will also see Volvo add 20 equipment dealerships in North America, as well as distribution subsidiaries in Europe and Russia. Volvo expects to make annual savings of SEK 600 million (€ 64 million) within five years through synergies with the new business. The deal is expected to close in the second quarter of this year.

Volvo has openly said it was keen to get into the road building equipment market for several years. Commenting on the acquisition, Volvo CEO Leif Johansson said, “This acquisition is strategically important since it will improve the overall competitiveness of Volvo CE as a full-range supplier of construction equipment.”

With sales of US$ 864 million (€ 648 million), Ingersoll Rand Road Development accounted for 63% of the company's Construction Technologies division's revenues last year – a total of US$ 1,36 billion (€ 1,02 billion). The remaining businesses – comprising light construction equipment, generators, compressors and attachments such as breakers – generated sales of US$ 498 million (€ 373 million).

Construction Technologies was already Ingersoll Rand's smallest division and it remains to be seen whether it will continue as a stand-alone division, or whether it will be rolled into Ingersoll Rand's Compact Vehicle business, which includes the Bobcat range of compact construction equipment.

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