Terex sell rigid truck business to Volvo for US$160 million
Terex Corporation has agreed to sell its truck business to Volvo Construction Equipment for approximately $160 million. The truck business manufactures and sells off-highway rigid and articulated haul trucks. The deal includes the firm’s Motherwell, Scotland manufacturing facility. The sale, which is subject to government regulatory approvals and other customary closing conditions, is targeted to close in the first half of 2014.
However, while the deal includes the purchase of the Scottish part of the business, financial analysts asked if the move was really about China. According to a Morgan Stanley report published today the deal included a share position in an Asian operation – namely a 25.2 per cent stake in Inner Mongolia North Hauler Joint Stock Co, which is said to be worth circa $106 million.
“The logic behind the deal is twofold, in our view. With the addition of articulated/rigid dump trucks, Volvo will close one of two key gaps (dozers) in its product line-up and improve VCE’s presence in light mining equipment, as
well as in quarrying, infrastructure, and non-residential applications. But, more importantly, with the stake in NHL, Volvo is expanding its presence in China, a focus region where it has already become the #1 player for wheel-loaders and excavators,” Morgan Stanley wrote in its report published 9 December.
Important part of our company…
“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.”
Volvo CE’s 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 TEL’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.”