Astec Industries, Chattanooga, Tenn., last week entered into a strategic alliance with Case Construction Equipment for the manufacture, marketing and sale of trenchers, horizontal directional drills and related equipment for the utility construction market.
Under an original equipment manufacturer agreement, Astec's Underground Group will produce the current line of eight Case trenchers, three HDD fluid-mixing systems and downhole tools, and will also dedicate selected models of Trencor trenchers and American Augers HDD's to be distributed through the Case dealer networks. As part of the agreement, Astec will also have access to Case's worldwide dealer networks and access to Case's purchasing power for these product lines through its supply base.
As part of the transaction and in order to ramp up its OEM manufacturing operation, during the next six months Astec will acquire certain intellectual property, tooling and other product specific manufacturing assets from Case. Trencor's manufacture and sale of Case trencher products is expected to commence in early 2003 with full Case product line integration and related manufacturing operations being completed by the end of 2003.
The company also announced that it entered into an agreement to sell its Trencor facility in Grapevine, Texas, and will relocate the Trencor operation. Negotiations are underway to acquire a state-of-the-art factory to which the Trencor operation will be relocated. The sale of Trencor's Grapevine facility is scheduled to close in the fourth quarter of 2002 and is expected to produce a gain of at least 35 cents per share.