Fantuzzi Looks Fantastic to Terex

Unlike Michael Phelps with his notoriously leaky goggles, a leading equipment manufacturer thinks its latest purchase is a cozy fit.

Terex (NYSE: TEX  ) announced this week that it will acquire port equipment manufacturer Fantuzzi. Unsatisfied with the scant media coverage of this curious development, I turned to a presentation delivered Wednesday at the Jefferies & Co. Industrial CEO Summit for some Foolish insight. Through these Foolish goggles, I see a company that fits well with Terex's strategic objectives and its existing product portfolio.

Terex boasts a diversified product line that principally serves the mining, construction, and utility industries. The mining equipment segment has been particularly important for Terex -- as it has for more specialized competitors like Joy Global (Nasdaq: JOYG  ) and Bucyrus (Nasdaq: BUCY  ) -- as construction demand has gone soft in Europe and the U.S. With the addition of Fantuzzi and its impressive array of container cranes, carriers, and stackers, the company has made a bold move into a bustling sector of the transportation industry.

Global container traffic has increased more than five-fold since 1990, and Terex offered estimates of a further 40% increase by 2011. The related growth of the terrestrial portion of a container's journey is confirmed by results from rail companies like Canadian National Railway (NYSE: CNI  ) . It's also music to the ears of Owens Corning's 2007 Intermodal Carrier of the Year, Burlington Northern Santa Fe (NYSE: BNI  ) .

One strategic priority that was evident in the presentation was the company's drive to diversify the manufacturing base geographically, particularly into Asia. With facilities in Italy, Germany, and China, the Fantuzzi purchase provides an important step in that direction. Furthermore, this Fool will be watching to see whether Terex utilizes Fantuzzi's existing network of service branches and technicians to bolster the important after-market business for the entire product portfolio.

Terex is offering $323 million for Fantuzzi, and expects the purchase to be accretive to earnings by the end of 2009. The move enhances Terex's stated ability to thrive during every stage of an economic cycle, and it certainly doesn't hurt to enter such a thriving global market for essentially familiar products.

Further Foolishness:

Now that you know my thoughts on Terex, how about sharing yours? Come join the free Motley Fool CAPS online community and share your views with a wonderful pool of talented individual investors. The Fool owns shares of Terex. Canadian National Railway Co. is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Christopher Barker captains yachts and writes about stocks. He can also be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. Christopher owns no shares in the companies mentioned. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (13)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 708355, ~/Articles/ArticleHandler.aspx, 9/30/2014 10:21:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement