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Terex quietly continues its surge

Diesel Progress North American Edition, Sept, 1999 by Mike Mercer

Acquisition of Cedarapids, alliance with Hyster latest moves in mobile markets; a dozen acquisitions in five years

Amid all the high-profile consolidation that has taken place within the mobile equipment industry over the last few years, Terex Corp. has managed to keep a relatively low profile. Yet at the same time, it's been one of the most active companies around, making more than a dozen acquisitions or alliances since 1995.

Most recently, Terex Lifting group and Hyster Co. have signed an agreement to form a strategic alliance for selling container handling equipment in North America. According to Terex, the agreement "contemplates" that Terex will supply Hyster with Hyster-branded Reachstacker container handlers.

Just prior to that, the company signed a definitive agreement to acquire Cedarapids Inc., from Raytheon Co. for $170 million in cash. Cedarapids is a manufacturer of mobile crushing and screening equipment, asphalt pavers and asphalt material mixing plants. It manufactures its crushing, screening and paving equipment in a 710,000 sq.ft, facility in Cedar Rapids, Iowa, and asphalt plants in a 140,000 sq.ft, facility in Glasgow, Mo.

"Following on the steps of the recent Powerscreen announcement, the acquisition of Cedarapids provides Terex with leading positions in the crushing and screening equipment markets," said Ronald M. DeFeo, Terex's chairman and chief executive officer. "This transaction is expected to be accretive to Terex's earnings, given the current performance and implemented cost reduction opportunities at Cedarapids as a stand-alone entity.

"In addition, the acquisition is a strategic fit with Powerscreen's screening and crushing businesses, which creates additional opportunities for revenue growth and cost reduction. With approximately $200 million in Cedarapids revenues, we expect substantial cost reductions as we integrate Cedarapids and Powerscreen with Terex."

Steve Filipov, vice president of international sales for Terex Lifting, added that Terex's "relationship with Hyster will provide the lifting group with additional long term volume and the ability to supply Hyster with a world-class machine in the North America lift truck market. This arrangement will allow Terex Lifting to extend its distribution presence in North America and team up with a full line distributor in North America."

According to DeFeo, the acquisition of Cedarapids is a significant addition to Terex. "The majority of Cedarapids' products are marketed to customers engaged in quarrying and infrastructure development, markets Terex already serves," he said. "These products are also sold through distribution channels that complement Terex's existing distribution network.

"Cedarapids is one of only two U.S. competitors offering a comprehensive package to turn rock into road, including crushing and screening, asphalt plants and pavers. This acquisition allows Terex to broaden its product line offerings and offer customers shovels and trucks to move aggregate to the crusher and vibratory compaction equipment to provide final compaction after paving."

In June, Terex also announced the agreement to buy Powerscreen International plc for approximately $294 million. Powerscreen, headquartered in Dungannon, North Ireland, is a leader in the manufacturing and marketing of screening and crushing equipment for the quarrying, construction and demolition industries. For the fiscal year ended March 31, 1999, Powerscreen reported sales of approximately $365 million with an operating margin of 11 percent.

The transaction is subject to normal regulatory approvals and is expected to close in the third quarter of 1999.

"Powerscreen provides Terex with leading market positions in the markets for screening, crushing and material handling equipment and extends the range of products we are able to offer our customers," said DeFeo.

Powerscreen manufactures screening and crushing equipment in the U.K., the Irish Republic and the U.S. It also manufactures and markets mobile and static screening equipment used for sorting and grading sand and gravel in quarries and waste materials on landfill sites.

Crushing equipment is used for processing rock into sand, and gravel and construction waste into reusable materials. The screening and crushing equipment business represented approximately 60 percent of Powerscreen's fiscal 1999 revenues. The remaining 40 percent were generated by the sale of truck-mounted material handlers, dumper trucks, compaction equipment and mixers.

Terex Corp. is based in Westport, Conn., and had 1998 sales revenues in excess of $1.2 billion. Terex is involved in a broad range of construction and mining related capital equipment operating in two segments - Terex Earthmoving and Terex Lifting. Terex Earthmoving manufactures and sells heavy-duty off-road trucks and high capacity surface mining trucks under the brand names of Terex, Unit Rig and Payhauler, as well as large hydraulic mining shovels under the brand name O&K. Terex Lifting manufacturers and sells telescopic mobile, lattice boom, and tower cranes, as well as aerial work platforms, utility aerial devices, telescopic material handlers and truck mounted cranes, and related products.

These products are sold under the brand names Terex, Lorain, PPM, O&H, Marklift, Koehring, Bendini, Simon, RO, Telelect, square Shooter, Holland Lift, American, Italmacchine, Peiner and Comedil.

Past acquisitions have included PPM of France, O&K Mining of Germany, Baraga Products, American Crane, Simon Access, Payhauler, Italmacchine and Amida Industries. Since 1995, Terex has invested approximately $630 million, including the Cedarapids deal, in 12 strategic acquisitions. Stay tuned for more.