01.05.2004

Manitowoc-JLG complete Delta Manlift deal

Manitowoc confirmed last night, April 30th, that it has completed the sale of the Delta Manlift company based in Tonneins France, to JLG, having received all necessary approvals and Delta works council advice much sooner than anticipated. The Original agreement between the two companies was announced dramatically in Munich as the Bauma trade show opened its doors on March 29th.

"With the completion of the sale, Manitowoc exits the aerial work platform segment and will concentrate on its core crane businesses, manufacturing crawler, tower, and mobile telescopic cranes, as well as boom trucks," said Terry D. Growcock, chairman and chief executive officer.

"This transaction is the kind of bolt-on acquisition that is consistent with our strategy to remain focused on the access industry," commented Israel Celli, JLG Vice President - International Sales, Marketing and Customer Support. "The Delta product line, which sells under the Toucan brand name, is a distinctly European design with an excellent reputation in the European aerial marketplace. The Liftlux brand of scissors, primarily known for large capacity and height, are very popular with specialty re-rental companies in Europe and North America and fit nicely at the upper end of the JLG scissor line. Collectively, these products further expand our robust aerial portfolio and enhance our ability to compete in the Eurozone region."

Manitowoc confirmed that it would continue to provide dedicated parts and service support for the discontinued aerial work platform product lines, primarily Liftlux and Grove/Manlift, through its Manitowoc CraneCARE operations. In addition to the Delta acquisition, JLG has acquired certain intellectual property and related assets of Manitowoc's discontinued product lines, namely Grove booms, Liftlux scissors and the small TKD boom line.

Vertikal Comment

This transaction completes Manitowoc’s departure from the aerial lift business allowing it to concentrate on its core businesses of Cranes, Refrigeration equipment and Shipbuilding. Manitowoc inherited the collection of small aerial lift operations as a by-product of its acquisition trail of the past few years. Delta systemes was bought by Grove in a transaction brought on by financial pressures at Delta Grove added Delta to its otherwise languishing Grove Manlift business. Liftlux was also a failing business when Potain stepped in and rescued it, taking the tower crane company into a totally new market.

When Manitowoc acquired both Potain and Grove it announced that it intended to remain in the access business and build on the Toucan, Liftlux, TKD and Grove product lines, on the surface, one of the broadest product ranges in the industry. The fragmented nature of these “Niche” companies made it a tough challenge though, and no one really believed that Manitowoc had a taste for the access business long term. This lack of confidence in the future had a negative impact right down the line, from incumbent staff to recruiting potential to distribution and on to the end customer.

JLG have gained the market leading mast boom range, the Toucan range holds a market share widely believed to be in the region of 50 percent. The Delta production plant is located conveniently close to the newly acquired JLG rebuild centre also located in the small town of Tonneins. The Liftlux range is also a well-respected product line; the challenge for JLG now will be where to build it? The principal market for these large scissor lifts is Europe, yet neither the Tonneins plant nor JLG’s plant in Maasmechelen, Belgium lend themselves to the assembly of these units. If JLG are to capitalise on the Liftlux brand it will need to move relatively fast to put them back in production, not to mention doing all possible to ensure that the Manitowoc parts team continue to support the Liftlux as if it were their own, with no long term stake in the discontinued products and low volume sales, this will be much more difficult than suggested.

The acquisition of the Grove/TKD boom designs is also a good strategic move, one assumes that JLG did not pay a great deal for this additional intellectual property to be added into the deal and while JLG do not need the additional boom products it has obtained, the later Grove booms were excellent products and this deal keeps them out of the hands of potential competitors such as Skyjack.

In summary the deal makes very good sense for JLG, rounding out its product line into key industrial, commercial and facilities management applications, Delta were already one of the few producers who were able to make a decent profit out of the mast boom product, due to pricing levels that are pitched between scissor and booms along with low production volumes. The benefit of JLG’s purchasing power should provide an immediate boost to an already profitable business.

On the distribution front, this deal will provide a much-needed boost to JLG’s presence in the French market, where it has struggled for years to win the market share that it likes to command. In North America the JLG distribution network could do very well with the Toucan product line substantially increasing volumes. JLG can also benefit, if it is careful, from some of the specialized distributors Delta has in Europe, many of them could easily add several of JLG's more industrial/Commercial products to their product offerings, either branded as Toucan or left as JLG.

The timing is also good, many industry analysts predict that the next surge of growth in Europe, in product terms, will be concentrated on smaller, more Industrial aerial lifts, not particularly JLG's greatest strength, this acquisition will definitely help.