Sunstate Re-acquires Deere's Minority Interest

Dec. 1, 2003
PHOENIX Sunstate Equipment Co. last month re-acquired the minority interest it sold to Deere & Co. in 1996. For Deere, the sale of its ownership stake

PHOENIX — Sunstate Equipment Co. last month re-acquired the minority interest it sold to Deere & Co. in 1996.

For Deere, the sale of its ownership stake in Sunstate represents a re-focus on its core competencies. “We acquired a portion of Sunstate with two objectives,” corporate public relations manager Ken Golden told RER. “At the time we acquired our minority interest, rental was emerging as an important segment and the investment was a way our construction and forestry group could learn more about the rental business. We also saw it as an opportunity for profitable growth. For us, both objectives were met. Now we are pointing our resources more towards the manufacturing and marketing of equipment, which is where we want to be in the construction market. This decision is not a lack of confidence in the rental market. This was a successful investment for us and a good relationship.”

Deere said it expects to record a pretax gain of about $30 million, or $22 million after-tax, in the fiscal first quarter of 2004, as a result of the sale.

Sunstate officials agreed that the relationship with Deere was beneficial in all respects and that the company will continue to enjoy a strong vendor relationship with the Moline, Ill.-based earthmoving equipment manufacturer.

“They took a look at their strategic direction and concluded they'd be willing to sell their interests and so we capitalized on that and have acquired their interest in the company,” Sunstate CEO Mike Watts told RER. “It was a good relationship all the way through.”

“The relationship has always been a strong one, but our strategic alignment is not quite where it was when it first began,” added Sunstate executive vice president Beno Jurgemeyer. “The industry has changed, a lot of consolidation has taken place and we're feeling comfortable where we are without opening a bunch of new branches. We have a lot of opportunities for growth in the Southwest.”

Jurgemeyer said the transaction took some leverage, but it did not go beyond limits Sunstate has been comfortable with in the past. He added that 2003 has been a good year for the Phoenix-based company, and that the company's management team is comfortable with the general direction of the economy, with a hope for continued slow but consistent improvement in 2004.

Sunstate Equipment is No. 12 on the RER 100 with 49 locations in eight states.