The maker of construction and mining-related capital equipment, Terex Corporation (TEX - Analyst Report) has completed the previously announced sale of its German compact construction business to Yanmar Holdings Co., Ltd. for $60 million in cash. The transaction will help the company to focus on its product portfolio. Terex’s shares gained around 1.8% and closed at $24.99 on Oct 5, a day after the news.
On Jun 21, Terex agreed to sell the business to Yanmar. The German compact construction business manufactures and sells midi/mini excavators, wheeled excavators and compact wheel loaders.
The transaction also includes the manufacturing facility in Crailsheim, Germany and the parts distribution center in Rothenburg, Germany. Through the divestment, Terex will be able to focus on businesses that can consistently deliver returns in excess of cost of capital. Notably, the company is currently analyzing its global manufacturing, distribution and office footprint.
In May 2016, Terex announced the sale of its Material Handling & Port Solutions (MHPS) segment to the Finnish company, Konecranes, for roughly $1.3 billion. The deal, which is expected to close in Jan 2017, is subject to customary regulatory approvals and the approval of Konecranes' shareholders.
Terex will benefit from its ongoing cost-saving initiatives and product development. The company is evaluating its cost structure and executing plans to cut approximately $60 million in annual costs. It expects to realize about 40% of the savings in 2016.
Joy Global, Inc. (JOY - Analyst Report) which belongs to the same sector as Terex, also decided to monetize its non-core assets to further strengthen its operation and financial position. The company aims to sell non-core assets in the range of $40 million to $50 million in fiscal 2016. In Aug 2016, the company completed the sale of its steel plate plant in Longview, TX for $29 million to Nucor Corporation.
Another player in the same sector, Dover Corporation (DOV - Analyst Report) recently signed a definitive agreement to sell its Tipper Tie unit for $160 million. The sale marks another step in the execution of Dover’s strategy to focus on business mix. Another industrial products sector stock, The Manitowoc Company, Inc. (MTW - Analyst Report) has successfully completed the spin-off of its Foodservice segment and made great strides related to its transition to a stand-alone Crane business.
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