Contractors Hot Line is part of the Catalyst Communications Network publication family.
Contractors Hot Line is part of the Catalyst Communications Network publication family.
Terex Corporation has finalized the acquisition of Environmental Solutions Group (ESG) from Dover Corporation in a strategic all-cash transaction valued at $2.0 billion, or $1.725 billion, when adjusted for tax benefits of approximately $275 million. The acquisition, aimed at bolstering Terex's environmental solutions offerings, is projected to significantly enhance the company's revenue growth and financial metrics, including free cash flow, EBITDA margin, and earnings per share (EPS).
The acquisition is expected to contribute double-digit percentage adjusted EPS accretion by 2025, with continued growth thereafter. ESG, which operates in the waste and recycling sector, has maintained a long-term organic revenue compound annual growth rate of over 7% for the past decade. The transaction represents about 8.4 times the estimated 2024 EBITDA, factoring in expected synergies.
With ESG under its umbrella, Terex will see an increase in its North American revenue share, growing from 61% to 67% based on the last 12 months' results as of Q2 2024. ESG holds the leading market position in refuse collection vehicles and waste compaction equipment, with well-known brands like Heil, Marathon, Curotto-Can and digital solutions 3rd Eye and Soft-Pak.
“We're delighted to welcome ESG into the Terex family of businesses. 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,” Terex President and CEO, Simon Meester, said.
“ESG is led by a world-class management team and has a strong track record of operational excellence. We look forward to working with ESG to drive long-term, sustainable value for all our stakeholders."
Patrick Carroll, who has led ESG for the past 14 years, will continue in his role as President of ESG. Carroll, who has a history with Terex as the former President of Terex Utilities from 2001 to 2005, highlighted the cultural alignment between ESG and Terex and expressed optimism about the future growth and market opportunities.
"This acquisition significantly strengthens Terex's portfolio and creates a path for accelerated, sustainable growth. ESG has demonstrated a sustained track record of resilient, high-single digit organic growth through the cycle,” Julie Beck, Terex senior vice president and CFO, said.
“Its EBITDA margin including run rate synergies is expected to add 140 basis points of margin accretion. ESG's efficient operating model with low net working capital will drive a meaningful improvement in free cash flow accretion. And finally, Terex expects ~$25 million of identified synergies to be achieved by the end of 2026.”
Beck also pointed out that ESG’s efficient operating model is expected to enhance free cash flow, with $25 million in synergies projected to be realized by 2026.
The acquisition marks a major step for Terex as it continues to expand its environmental equipment solutions and tap into the growing waste and recycling market.