Ingersoll Rand Co. last week agreed to sell its Bobcat, Utility Equipment and Attachments business units to Doosan Infracore for about $4.9 billion. The sale is subject to customary closing conditions and is targeted to close early in the fourth quarter.
The combined businesses manufacture compact equipment, including skid-steer loaders, compact track loaders, mini-excavators, telescopic handlers, portable air compressors, generators, light towers and attachments. The units generated $2.6 billion in 2006 revenues and $370 million in operating profits.
Herbert Henkel, chairman, president and CEO of Hamilton, Bermuda-based IR — which has corporate offices in Montvale, N.J. — said the sale will complete the transformation of the company into a diversified industrial manufacturer focused on global climate control, industry and security.
The sale includes manufacturing facilities in Gwinner and Bismark, N.D.; Carrollton, Ga.; Litchfield, Minn.; Petersburg, Va.; Wujiang, China; Dobris, Czech Republic; Lyon and Pontchateau, France; Slane, Ireland; and Tredegar, Wales.
Doosan, which is setting up a company with Doosan Engine Co. to lead the acquisition, will raise $700 million and borrow the rest and repay the loans from its cash flow, Doosan said. Korean press accounts report the Korean government is putting up some of the additional money for the transaction.
Ingersoll Rand announced May 15 it would consider selling the popular Bobcat line — believed to have more than a 30-percent share in the United States skid-steer loader market according to industry sources — to exit construction-related operations and focus on its three other units: cooling, industrial and security operations. Revenue at Bobcat fell 9 percent in the second quarter, primarily because of softness in the housing construction market. In February Ingersoll Rand sold its road-building equipment unit to Volvo AB for $1.3 billion. The two acquisitions provide IR with more than $6.2 billion in gross proceeds.
The acquisition makes Doosan Infracore one of the top 10 construction equipment manufacturers in the world. Doosan Group has been acquiring companies since 2000 and is one of South Korea’s 10 largest conglomerates. It acquired Doosan Heavy Industries & Construction Co. in 2001 and Doosan Infracore in 2005, as well as Daewoo Heavy Industries and Machinery in April 2005. It created Doosan Infracore America, which has 70 dealers with more than 130 locations.
“Doosan Infracore’s strong position in Asia-Pacific markets will provide the acquired businesses significant growth opportunities,” said Ingersoll-Rand CEO Herbert Henkel.
The acquisition is the largest international acquisition by a South Korean company. Doosan has prospered from the Chinese construction boom and, according to industry sources, has a 20-percent share of the excavator market in China. However, compact equipment has had less acceptance in the Chinese market so far, according to industry analyst Frank Manfredi of Manfredi & Associates.
Doosan officials said it has no immediate plans to make changes to Bobcat’s international operations and have assured North Dakota’s governor John Hoeven it would maintain the company’s manufacturing facilities in that state.