09.07.2010

Tanfield extends deal exclusivity

Tanfield, owner of Snorkel aerial work platforms has extended the exclusivity period for the sale of its Smiths electric vehicle business to Smith Electric Vehicles US (SEVUS) for up to £70 million.
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A Smiths (SEVUS) electric truck

The discussions and outline deal were announced in March with a four month exclusivity given to allow SEVUS to tie up the required funding. Tanfield says that it is still in active discussions and as a result it has extended the exclusivity period for a further 60 days.
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Tanfield owns 49 percent of SEVUS and all of Smiths so the nub of the issue revolves around finding appropriate financing to allow SEVUS to complete the deal. The US business has been the recipient of grants to encourage the development of low emission vehicles and the sector continues to generate interest. President Obama recently made a visit to the SEVUS facility to stress the importance of the sector to the countries carbon reduction plans.

Vertikal Comment

Tanfield is looking for the some of the sale proceeds from this deal to fund the expansion of its Snorkel business as the market picks up and resumes its long term growth trends. It will almost certainly feel that it is right to distribute at least some of it to its shareholders and or use some as a war chest to take advantage of acquisition bargains that are likely to be thrown up as cash starved companies are stretched by a recovery.

The group’s management was confident that appropriate financing would be found when it announced the deal. This extension suggests that it remains confident.

If the deal does not go ahead the group is likely to need to find alternative funding if it is to grow both businesses. Or it may well look at a less attractive suitor for Smiths.