A difficult 18 months for Northern Ireland quarrying equipment company Powerscreen International ended last week after it was snapped up by US machinery maker Terex in a £181m deal.
The acquisition followed Powerscreen’s return to profitability after accounting irregularities at its former agricultural equipment making subsidiary Matbro, which plunged it into crisis.
Matbro, since sold to John Deere, cost Powerscreen about £68m, but the subsequent sale of non-core businesses has returned it to financial health.
Terex, which operates around the world and makes lifting and earthmoving equipment, said it planned to expand Powerscreen’s business and create more jobs.
The 195p-a-share offer values Powerscreen shares at a 13% premium to the previous week’s closing price and 90p ahead of their level before the company announced talks.
`This acquisition gives us an ability to compete on a global field, which is what is required to sustain profitability,’ said Terex chief executive Ronald DeFeo.
He added that there were excellent synergy opportunities to exploit between the two businesses. DeFeo forecast annual savings of between £6.25m and £10m.
Powerscreen has almost 2,500 staff in Ireland, the UK and the US. DeFeo said he could not guarantee that there would be no job losses.
Powerscreen’s unaudited results for the 12 months to the end of March showed a pre-tax profit of £38m, compared to a £47m loss in 1998. About £16m came from disposals. Sales were up 10% at £226m.
Chief executive Brian Kearney, who took office last November, said debts had been cut with gearing falling from `a disastrous level of around 250% to less than 8%’ in March.
Analysts said the bid was a good deal for investors despite the price being low compared with Powerscreen’s historic share price, which was above 700p before the problems at Matbro.