Volvo to buy IR road unit

15 April 2008

Volvo Construction Equipment has agreed to buy Ingersoll Rand's road building equipment business for US$ 1.3 billion in cash. The division makes soil and asphalt compactors, pavers and milling machines and had sales of US$ 864 million last year. The deal also includes Ingersoll Rand's US-built telescopic handler and rough terrain forklift truck ranges.

Besides acquiring the product lines 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 been trying to get into the road building equipment market for some years. Commenting on the acquisition, Volvo CEO Leif Johansson said, “Th is 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, Ingersoll Rand Road Development accounted for 63% of the Construction Technologies division's revenues last year - a total of US$ 1.36 billion.

US Bechtel had sales of US$ 20.5 billion last year, a +13.3% rise on the figure of US$ 18.1 billion seen in 2005. The company's forward order position was even stronger, with US$ 24.7 billion worth of new work being booked last year, up +33.5% on 2005's US$ 18.5 billion.

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