Finning sells UK material handling business
Finning International Inc has announced that has sold the business and assets of the material handling division of Finning (UK) to Briggs Equipment UK Ltd.
Briggs, a Texas based rental company with a substantial aerial lift rental fleet, is a subsidiary of Sammons Enterprises Inc. of Dallas, Texas.
The price Briggs has paid is around is £85 million. The transaction is subject to the satisfactory completion of normal closing conditions and adjustments, which should be completed by September 29, 2006.
Finning says that the Material handling business, which acquired the Lex-Harvey forklift rental business in 2003, distributes Mitsubishi-Caterpillar Forklifts in the UK with sales in the region of 3,500 to 4,000 units a year. It also has a substantial industrial forklift rental business and employs over 1,000.
The company says that the material handling business no longer fits with its concentration on the construction industry and intends to step up its focus on Hewden Stuart, the crane, access, plant and tool hire business, along with its Caterpillar distribution. It also took on the distribution of Perkins engines in the UK last year through its subsidiary - Diperk
"Following an extensive strategic review of our United Kingdom based businesses, we determined that the Materials Handling division no longer represents a core business for Finning. The sale of this division will allow us to focus our financial and management resources on those UK businesses that are more closely associated with our Caterpillar equipment related core strengths. These include Finning (UK)'s Caterpillar dealership for England, Scotland and Wales, as well as Hewden, the largest provider of rental solutions for the UK construction industry, and Diperk UK, the distributor of Perkins engines and parts in the United Kingdom," said Doug Whitehead, president and CEO of Finning.
Mike Waites, Finning's executive vice president and chief financial officer said "Proceeds from the sale will initially be used to repay debt. We are also announcing today that we are proceeding with an offer to repurchase for cash, up to £50 million of our outstanding £200 million 5.625 percent notes due 2013. With our very strong financial position, we are well placed to consider future growth opportunities for Finning."
The sales price is a discount on the net book value of the tangible assets associated with the Materials Handling division. This will result in an after-tax loss of approximately C$33 million in fiscal 2006, primarily made up of the write-off of the goodwill and intangible assets.