ASV Inc., a Grand Rapids-based manufacturer of rubber-tracked vehicles and undercarriages, soon could be sold to Westport, Conn.-based Terex Corp.
Terex announced Monday that it has signed a definitive agreement to buy ASV in a deal worth about $488 million. That equates to $18 per diluted share of ASV common stock.
Before the sale can move forward, however, it will need to win the support of investors controlling a majority of ASV's stock. The proposed transaction also must undergo a federal regulatory review.
Terex Chairman and CEO Ronald DeFeo said his company has offered to pay about a 40 percent premium above the average price at which shares of ASV have been trading for the past two weeks. Last Friday, ASV closed trading at $12.29.
Caterpillar Inc. -- one of ASV's largest customers and investors -- already has signed off on the proposed sale. Caterpillar controls 23.5 percent of ASV's stock, which it has agreed to tender as part of the agreement, according to DeFeo. He hopes to close the sale by March 31.
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Should investors controlling 90 percent of ASV's stock agree to tender their shares of the company to Terex for $18 apiece, no special shareholder meeting and vote will be required to seal the deal.
If Terex's bid wins a majority of investor support yet falls short of the 90 percent threshold, a vote on the sale probably would be delayed beyond the first quarter of this year, said Lisa Walsh, ASV's director of corporate affairs.
ASV employs about 290 people companywide, including 235 at facilities in Grand Rapids and Cohasset.
"We don't anticipate this will have any negative effects on the workplace. We hope that in the long run, this will be a growth story," said Mike Bazinet, Terex's director of global communications.
"We think this is very good news for our employees, our investors, our suppliers and our dealers," Walsh said.
She pointed out that there is virtually no production or distribution overlap between the two companies, and Terex is projecting rapid growth for ASV. In a teleconference with analysts Monday, DeFeo said he expects ASV's sales to triple in the next three to five years with the help of Terex's well-established European distribution network bringing rubber-tracked equipment built in Minnesota into new markets.
"This should leapfrog our international sales," Walsh said.
ASV's plants in Grand Rapids and Cohasset also could pick up some domestic production of Terex equipment, she said.
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If the acquisition is approved, ASV will return to private ownership. The company went public in 1994 and has been traded on Nasdaq ever since.
Terex boasted sales of $7.6 billion in 2006, manufacturing aerial work platforms, construction equipment, cranes, industrial gear, mining equipment and a host of other machines. Companywide, the company employed about 18,000 people in 2006, according to Hoovers, a business information service.
A much smaller company, ASV projected its sales in 2007 would be between $220 million and $250 million.
