A provider of engineered lifting solutions, Manitex International, Inc. (MNTX) has completed its previously announced acquisition of PM Group S.p.A. for $91 million (considering exchange rate movement). The buyout will assist Manitex in expanding its product portfolio by adding another outstanding product, knuckle boom cranes.
On Jul 21, 2014, Manitex agreed to acquire PM, an Italian manufacturer of truck-mounted hydraulic knuckle boom cranes, with a 50-year history and product range of more than 50 models. The company’s largest subsidiary, Oil & Steel, is a manufacturer of truck-mounted aerial platforms.
Through Dec 2014, PM had revenues of around $100 million. PM had also accumulated $140 million debt, following its 2008 LBO (Leveraged Buyout) refinancing, which created an opportunity for Manitex to acquire the company and restructure the debt.
However, the agreement was subject to the approval of a debt restructuring plan by the Italian court. The deal was initially valued at $107 million, including $24 million in cash provided by Manitex’s new term loan, as well as $15 million in equity issuance distributed primarily to the PM banks. The deal also includes $68 million in assumed debt and liabilities, including working capital facilities for PM.
On Jan 5, Manitex issued $15 million new subordinated convertible notes with institutional investors and also entered into an amended and restated credit agreement with its current banking group to finance working capital, for general corporate purposes and to fund the acquisition of PM.
The 6-year subordinated notes will carry a 6.50% per annum coupon, and will be convertible at the holder's option, subject to customary adjustments. Further, the new credit agreement provides Manitex with a $71 million credit facility, comprising $57 million Senior Secured Revolving Credit Facility and a $14 million Secured Term Loan, each maturing on Aug 19, 2018.
The acquisition was finally completed for $91 million, after considering the impact of exchange rate movement. The purchase price consisted of $21 million in cash, $60 million of assumed non-recourse debt and one million shares of Manitex. The cash was provided by Manitex's recently announced new bank credit facilities and the issuance of new convertible subordinated notes.
The acquisition is a strategic fit for Manitex, which intends to grow both organically and inorganically. The PM buyout will add products like knuckle boom cranes, which have been gradually gaining traction in the North American markets over the past few years, to Manitex’s portfolio. Manitex also expects to utilize PM’s broad international sales network.
Additionally, with this acquisition Manitex will enjoy the benefits of new manufacturing facilities and capacity, new distributors, geographies and niche market applications.
The PM acquisition is also favorable for Manitex from a financial standpoint as the restructuring of PM’s debt includes a reduction of more than $65 million. The acquisition is also expected to be accretive to Manitex's net earnings in 2015 and beyond. This, together with ASV, Manitex’s new joint venture with Terex Corp. (TEX), will allow the former to start 2015 with an annual sales run rate of approximately $500 million.
In the third quarter of 2014, Manitex witnessed an increase in its backlog, and expects mix and margin to improve in the fourth quarter and beyond led by military orders in Liftking and stronger orders for larger cranes from numerous dealers.
Moreover, Manitex remains committed toward expanding its innovative product offering by adding new ones to its portfolio and diversifying its revenue sources through in-house development and acquisitions.
Bridgeview, IL-based Manitex International is a leading provider of engineered lifting solutions including boom truck and rough terrain cranes, rough terrain forklifts, special mission oriented vehicles, container handling equipment and specialized trailers.
Manitex currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the same industry include The Babcock & Wilcox Co. (BWC) and Graco Inc. (GGG), both holding a Zacks Rank #2 (Buy).
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