Terex Completes Formation of Joint Venture with Manitex - Analyst Blog

Terex Corporation (TEX) announced the successful completion of the formation of its joint venture (“JV”) with Manitex International, Inc. (MNTX) and the closure of the previously announced sale of 51% of A.S.V., Inc. to Manitex.

ASV, a wholly owned subsidiary of Terex since 2008, with its manufacturing facility in Grand Rapids, MN, manufactures and sells a line of high quality, technology-leading compact rubber-track and skid-steer loaders and accessories.

As a result of the transaction, Terex now owns 49% and Manitex owns 51% of ASV. The formation of this JV is positive for both Terex and ASV. Terex will maintain its broad compact equipment product offering and its participation in an expected housing recovery after the transaction.

ASV will continue to sell its compact track loaders and skid steers under the Terex brand JV. Further, Manitex will assist the development of ASV's existing distribution channels, allowing rapid growth of its business.

On the other hand, the transaction will help Manitex to boost its presence in the broader housing and construction markets, and thus increase its earnings power, first-quarter 2015 onward. Manitex is also expected to acquire PM Group before 2014-end. This would help generate significant profits and value for shareholders, going forward.

The JV resulted in more than $125 million of cash received by Terex, including cash from a recapitalization of ASV prior to closing and a significant amount in tax benefits. Terex will use a portion of the cash it receives to acquire $12.5 million of newly issued Manitex shares and $7.5 million of convertible debt securities.

Terex expects adjusted earnings per share for 2014 to be at or on the lower end of the previously announced range of $2.35 to $2.50. The company reiterated its 2014 net sales range of $7.3–$7.5 billion.
 
Terex anticipates that the Aerial Work Platforms (“AWP”) market will remain strong with overall demand levels for equipment expected to remain flat over the near term. However, the outlook for the Construction and Cranes business remains challenged due to uncertainty in Non-Residential Construction. Nevertheless, the opportunities from cost-reduction measures, interest expense declines and tax rate improvements remain tailwinds for the company.

Westport, CT-based Terex is a global equipment manufacturer, catering to the construction, infrastructure and surface mining industries. The company's manufacturing facilities are located in the U.S., Canada, Europe, Australia, Asia and South America. It also offers a complete line of financial products and services to assist in the acquisition of equipment through Terex Financial Services.

Terex currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industrial products sector include Alamo Group, Inc. (ALG) and Allegion plc Ordinary Shares (ALLE), both sporting a Zacks Rank #1 (Strong Buy).