29.11.2001

Terex purchasing Atlas Weyhausen and Schaeff

Terex will finally purchase Atlas Weyhausen and is also buying the Schaeff Group. The deal follows a complex arangement in which Terex’s Fil Filipov has for the last few months been “advising” the current owners of Atlas Weyhausen, one of Germany’s largest articulated boom crane manufacturers.
Fil Filipov

Atlas is also one of the UK’s largest suppliers of articulated boom cranes. At the same time, Terex has announced that it is buying the Schaeff, Group, owner of Fuchs which formerly produced a range of small crawler cranes but has in recent years focussed on scrap handling equipment.

Speaking to investment analysts and journalists during a live Webcast, Ron DeFeo, chairman of Terex, said that a major advantage of the deal was the network of 60 dealers in Germany that Terex and Schaeff brought with them. He noted that Germany is Europe’s largest construction market with a total turnover of about $2.6 billion but that only $75 million of Terex’s $1.8 billion sales is in Germany. Terex’s turnover in Germany will immediately jump to $325 million boosted by an additional $250 million of German turnover from the two acquisitions. Total turnover at Atlas is predicted to be $180 million this year and $220 million at Schaeff.
Atlas Weyhausen is Germany's largest manufacturer of articulating boom cranes

Acquisition of both companies should happen at the end of this year or very early next year said DeFeo. Looking at the strengths and weaknesses of both companies he described Atlas Weyhausen as a very good company which had not run itself cost-effectively. As a result, personnel costs were running at 41 per cent when Terex first became involved: “That’s an incredible amount” said DeFeo who revealed that union agreement had now been reached on 585 redundancies in Germany and 705 in total worldwide. Already 515 people are “off the Atlas payroll” and this will save $26 million annually. DeFeo said that personnel costs at Atlas are now 27 per cent which “is still relatively high” when compared to the 16 per cent at Terex. He also revealed that Atlas had been paying $3.5 million a year in consultancy fees, Terex has cut this to zero.

“We have been able to save substantial amounts on re-structuring by working with unions, the local governments and banks” said DeFeo who commented that “we ran the company for about three months before we decided to move forward and exercise our option”.

Atlas is headquartered in Bremen and has five factories, including one in the UK. Schaeff has nine factories, one of which is in the US. Asked about the future of the German factories, DeFeo told analysts that “Right now we will keep the twelve factories open, but will of course evaluate them over time”. He indicated that there might be synergies between the two companies particularly in the areas of cylinder manufacture and fabrication manufacture.

Terex says that Atlas has 12 per cent of the world market for articulated cranes. It estimates the world market at 30,000 units per year and says that Atlas has the number 2 position in Germany and the number 1 in the UK (with 50 per cent of the market). It is also an important player in the German wheeled excavator market and is number one in the 15-20 tonne class.

Schaeff was described by DeFeo as a much better run company with less immediate opportunities for cost cutting. It is a leading manufacturer of compact construction equipment and offers the Fuchs range of scrap material handlers.

Management and restructuring at Atlas has been in the hands of Steve Filipov who was seconded to the company from Terex. However, it was revealed during the conference that his father Fil Filipov had been running the acquisition. Fil Filipov said that Atlas has been losing money for the last six years, has modern production facilities that are running at 50 per cent of capacity but needs no additional capital investment in the near future as it has benefited from substantial recent investment.

Filipov also confirmed that the Atlas name would be retained and that distributors would gradually be offered a range of additional Terex products.

“We believe there are significant consolidation and sourcing opportunities among Schaeff, Atlas and the Terex Group generally - specifically, we have identified about $41 million of cost reduction initiatives, with about $24 million already implemented at Atlas through our consulting assistance” said Filipov.

“We expect these acquisitions will add $400 million in annual revenues and will be accretive by $0.25 - $0.30 per share after planned cost reductions are implemented” said DeFeo. He did not reveal the prices paid for the companies, but described them as “credit neutral and meaningfully accretive”. An earlier release from the company spoke of the Schaeff family taking a significant holding in the Terex Group.

* Terex has recently announced the closure of the Terex Aerials factory in Cork, Ireland and the Matbro telehandler production facility in Tetbury, UK. Telehandler production is moveing to the Fermec factory in Manchester, UK.

See also:

Atlas Weyhausen bought by US company with Terex involvement July 18, 2001.

Terex clarifies Holland Lift intentions August 13, 2001.

Terex On the prowl April 27, 2001.

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