Terex signed a definitive merger agreement to acquire Oklahoma City, Okla.-based CMI. The agreement calls for Westport, Conn.-based Terex to obtain all outstanding CMI shares at an exchange rate of 16 cents per share of Terex common stock for each share of CMI common stock, subject to a downward adjustment in the event the Oklahoma company's consolidated net debt exceeds $75.25 million at closing.
The transaction is expected to close in the third quarter.
CMI manufactures asphalt and concrete mixing plants, road profiling and reclaiming equipment, concrete paving systems and landfill compactors and grinders.
“While the near-term revenue performance for most construction-related equipment is challenging, improved fiscal conditions at all levels of government and mandated increases in federal road and infrastructure spending over the next several years should allow for continued growth in demand for road-building and infrastructure equipment,” said Terex CEO Ron DeFeo.
Terex executive vice president Fil Filipov, who previously ran the company's crane division, will take over as CMI president.
In other Terex news, the company lowered its expected second quarter and full-year 2001 earnings to 55 to 60 cents a share from 65 cents a share as a result of challenging market conditions. DeFeo said Terex' operating margins have held up despite volume declines of more than 20 percent in North America.
DeFeo added that the company plans to close four manufacturing locations, two in North America and two in Europe, and move production before year-end, allowing the company to reduce costs by $10 million to $15 million annually. About 170 employees will be terminated. The company would not disclose which plants would be shut down.
Also, aerial work platform manufacturer Pinguely-Haulotte in L'Horme, France backed out of a letter of intent to purchase Terex's European access platform businesses.
In November the two parties agreed to a deal whereby Pinguely-Haulotte would pay $13.5 million for the businesses and Terex plants in the Netherlands and Ireland. Terex would retain $21 million of European receivables as part of the transaction. While not giving a specific reason for not completing the purchase, Pinguely-Haulotte chairman Pierre Saubot said the businesses gradually became “less interesting” due to North American market changes and Terex's position in that market.
Earlier, Terex indicated its European units were not achieving the desired results.