04.10.2006

Terex sells Tatra

Terex has concluded the sale of its 80.5 percent holding in Tatra a.s. to Blue River s.r.o. for approximately $26.2 million in cash plus the repayment of all inter-company debt owed to Terex by Tatra of approximately $31.6 million.

Additionally, Blue River will take over all of Tatra’s external debt, which totals approximately $22 million.

Terex had previously identified Tatra, a Czech-based manufacturer of heavy duty on and off road trucks, as a non-core operation. The buyer, Blue River s.r.o., is a Czech-based consortium of four international private investors, led by Ronald Adams, originally from Texas and a member of the Tatra supervisory board, which until recently was chaired by Fil Filipov.

“Terex’s management team regularly evaluates current operations and future opportunities to determine the most appropriate allocation of resources,” said Ronald M. DeFeo, Terex’s chairman and chief executive officer.

“After detailed analysis, Tatra was identified as non-core and we commenced a process to realize maximum value for our investment. Tatra’s employees build terrific products, but our shareholders expect management to focus resources on opportunities that best fit the overall goals of the Company, and Tatra no longer fit with Terex’s strategy.”

Vertikal Comment

Tatra was the last acquisition orchestrated by Fil Filipov and was never a great fit with Terex, being largely a commercial truck manufacturer. It had gradually moved into specialist road going trucks, most of which are sold for military applications.

Last year the company produced 1,053 trucks, up by 10% on 2004. This year it is on track for a similar increase. At one time the company produced cars, which still have loyal following among enthusiasts.

Prior to the sale there was serious concern locally that the business would be broken up, rather than sold as a going concern, possibly bringing an end to the Tatra name? Hopefully this deal will work out well for both Terex, for which it was a distraction, and the employees, who remained nervous of Terex’s intentions.