Terex Plans To Use Money From Mining Sale for Acquisitions
December 21 2009 - 10:46AM
Dow Jones News
Terex Corp. (TEX) intends to use the money from the sale of its
mining business to Bucyrus International Inc. (BUCY) to acquire
machinery and industrial companies in niche markets.
Terex said Monday the $1.3 billion sale was prompted by the
company's increasing inability to provide the working capital and
ongoing investment to effectively compete in the mining equipment
market.
Terex's stock was recently trading up 4.3% at $20.04. Bucyrus
was up 9.6% at $55.76 a share.
"Terex would need to continue to invest in this business quite
substantially," Terex Chief Executive and Chairman Ronald DeFeo
said during a conference call with Wall Street analysts. "Bucyrus
already has that investment in place."
For Bucyrus, the acquisition will expand the company's business
lines in hydraulic mining excavators, electric drive mining trucks,
track and rotary blasthole drills, and highwall mining equipment.
The business generates about $1 billion a year in net sales for
Connecticut-based Terex.
The transaction, which is subject to customary regulatory
approvals, is expected to close in the first quarter of 2010.
DeFeo said Terex would use the proceeds from the sale to retire
debt and acquire machinery and industrial companies in markets
where Terex can have more market impact. DeFeo said his goal is to
double Terex's annual sales by 2012.
"We're going to refocus the company toward machinery and
industrial niches," DeFeo said. "We're going to take this company
to places it hasn't been before."
Terex, which was built through a series of acquisitions, sells
cranes, aerial work platforms, construction equipment, and material
crushing and screening equipment.
DeFeo has been looking to reshape the company after finding it
difficult to compete against larger rivals, such as Caterpillar
Inc. (CAT), with large product lines of equipment.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
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