Morita acquires Bronto
Federal Signal sold its fire and aerial lift business Bronto Skylift to Morita Holdings Corporation for €80 million in cash, subject to post-closing adjustments. The all share deal is expected to be completed during the first quarter of 2016.
Morita is Japan's leading producer of fire fighting equipment, including fire engines, airport fire tenders and rescue ladders/platforms. It also produces a range of recyling equipment and garbage/refuse collection trucks.
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A Morita ladder platform
Established in 1907 it has annual revenues of around $600 million and has acquired Bronto to provide it with an international fire fighting platform product line and access to a wider international market. The acquisition will also provide it with a full line of dedicated rescue platforms, to complement its ladder platform range that is topped with a 56 metre model
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Bronto's 112 metre platform
Federal Signal’s executive chairman Dennis Martin said: “We are pleased to announce this agreement with Morita, which allows us to maximise the value of Bronto for the benefit of our shareholders. Bronto has contributed significantly to the performance of Federal Signal for many years, and we believe that now is the right time to divest the business given Bronto’s recent performance and turnaround efforts.”
Chief executive Jennifer Sherman added: “This transaction is a significant milestone for Federal Signal, as it completes our departure from our Fire Rescue vehicle line of business. The sale of Bronto will allow us to focus on our core businesses as we pursue strategic acquisition opportunities and redeploy our capital more effectively. We are deeply appreciative of the efforts of the entire Bronto team and are confident that Morita will be an excellent owner for the business. We expect a smooth transition and integration.”
We did not see this one coming. Bronto had been the subject of a possible acquisition a couple of years or so ago but owner Federal Signal appeared to have made the decision to keep it, and in several quarters in the last few years the Bronto business has helped shore up what otherwise would have been lacklustre results for the group. In recent months the company has gone through some major management changes, some of which looked very odd indeed, but whose purpose has now become clear. So looking back all the signs were there - we just did not see them.
The deal looks like an excellent one for Morita and possibly Bronto employees, customers and suppliers. Morita is publicly quoted and runs a tight range of equipment related businesses, and its core value is safety - protecting people from danger, in its own words - “we develop and produce products that help make a safe and secure society for all”.
While a good deal of its focus is fire-fighting equipment and fire extinguishers it also builds recycling equipment and garbage/waste collection vehicles. So a move into the safe working at height equipment sector could be a very good extension to its product offerings.
For Bronto, it remains a Finnish company with a foreign owner - the past 20 years as part of American public company Federal Signal - however it has a great deal more in common with Morita, in terms of product range, than it ever did with Federal Signal. It can also gain a great deal from the Japanese in the areas of production and quality management techniques, not to say that it does not already build a first class product.
Morita will gain enormously from Bronto’s innovative engineering, strong brand name and international coverage. Bronto will also help Morita break out of the mature Japanese market where it has a major market share.
It has targeted Bronto for its technology as well as its international presence, but the company can also gain by adding the Bronto utility and ‘industrial’ range of truck mounted platforms to the products it sells in Japan, as well as gaining a global distribution network for some of its other fire fighting products.
The biggest challenge for Bronto will be adapting to the Japanese management culture, which can often be slow, secretive and overly Japanese-centric - if there is such a word. However every company is different and Morita has the opportunity to learn from companies such as Tadano, which made a similar move more than 20 years ago when it acquired Faun.
All in all this is a very interesting and potentially very positive move for all those who have an interest in Bronto doing well. Watch this space