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