TLDR:
- Terex completed $750 million Senior Notes offering
- Acquired Dover’s Environmental Solutions Group for $2 billion
- Expanded credit facilities to $800 million revolving and $1.25 billion term loan
- ESG acquisition expected to be double-digit percentage EPS accretive by 2025
- Anticipates $25 million in synergies from ESG deal by 2026
Terex Corporation has finalized its acquisition of Dover Corporation’s Environmental Solutions Group (ESG) in a $2 billion all-cash transaction, marking an expansion in the waste management and recycling sector.
The deal, announced on October 8, 2024, was funded through a combination of a $750 million Senior Notes offering, new credit facilities, and available cash.
The acquisition of ESG, a leader in North American refuse collection vehicles and waste compaction equipment, is expected to strengthen Terex’s market position and financial performance. ESG brings with it a portfolio of well-known brands including Heil, Marathon, and Curotto-Can, as well as digital solutions offerings like 3rd Eye and Soft-Pak.
To finance the purchase, Terex successfully completed a private offering of $750 million in 6.250% Senior Notes due 2032. The company also amended its credit agreement, increasing its revolving credit facilities to $800 million and adding a new seven-year term loan facility of $1.25 billion.
Terex anticipates that the ESG acquisition will drive increased revenue growth, free cash flow, and earnings before interest, taxes, depreciation, and amortization (EBITDA) margin. The company projects the deal to be double-digit percentage adjusted EPS accretive in 2025, with further growth expected in subsequent years.
Simon Meester, Terex President and CEO, expressed enthusiasm about the acquisition, stating,
“ESG is a non-cyclical, financially accretive, market-leading business that will complement and strengthen Terex’s portfolio with synergies in the fast-growing waste and recycling end market.”
The integration of ESG is expected to yield approximately $25 million in cost and revenue synergies by the end of 2026. This strategic move will also expand Terex’s presence in North America, with the region now accounting for 67% of the company’s total revenue, up from 61% previously.
Julie Beck, Terex SVP and CFO, highlighted the financial benefits of the acquisition, noting that ESG’s EBITDA margin, including run-rate synergies, is expected to add 140 basis points of margin accretion. The deal is also anticipated to drive a significant improvement in free cash flow.
Patrick Carroll, who has led ESG for the past 14 years, will continue in his role as President of the Environmental Solutions Group under Terex ownership. Carroll expressed optimism about the cultural fit between ESG and Terex, as well as the opportunities for expanded market reach.
The acquisition represents a purchase price of approximately 8.4 times ESG’s 2024 estimated EBITDA, including expected run-rate synergies. When adjusted for the present value of expected tax benefits of approximately $275 million, the net purchase price stands at $1.725 billion.
ESG has demonstrated consistent growth over the past decade, with a long-term organic revenue compound annual growth rate (CAGR) of over 7%.
This track record of resilient growth is expected to contribute to Terex’s overall financial performance and market position in the environmental solutions sector.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
