McCloskey’s mobile crushers and screeners will help Metso boost its share of the aggregates sector.
FINLAND – Metso has signed an agreement to acquire McCloskey International, a Canadian mobile crushing and screening equipment manufacturer, to expand Metso’s offering in the aggregates industry globally and to strengthen the customer reach especially to general contractor customers.
The mobile aggregate equipment market is expected to grow by 4% to 6% annually during 2019-23, driven by the underlying road construction spend. With this acquisition Metso will be able to better take part in the attractive growth of mobile products within the aggregates industry.
“This acquisition is in line with Metso’s profitable growth strategy. It strengthens our aggregates business in key growth areas. The different cycles of aggregates balance our previously more mining focused minerals portfolio well,” says Pekka Vauramo, Metso’s president and CEO.
“Customers in aggregates and construction have varying business needs. This acquisition supports our expansion plans to approach customers through multiple complementary channels and offerings to meet their diverse needs”, added Markku Simula, president of the aggregates equipment business area in Metso. “Going forward, Metso plans to continue developing the McCloskey brands and distribution channels independent of the Metso channel. Synergies are apart from sourcing mainly revenue related, resulting from the wider offering available to both channels as well as additional crusher equipment, service and consumable sales,” he continued.
In the 12-month period ending Sept. 30, 2018, McCloskey had pro forma sales of $464 million and a pro forma EBITDA margin of 10.3%. The company’s strong track record of profitable growth over the past several years is expected to continue in 2019. The company’s sales in the fiscal year ending Sept. 30, 2019, are expected to exceed $500 million.
McCloskey’s total assets in the fiscal year ending Sept. 30, 2018, were $285 million and net debt $79 million. The total assets were 6% of Metso’s total assets on Sept. 30, 2018. Since then there has been no material change in the financial position of the company. The company’s total assets have increased approx. 20% to 25% since the end of last September due to growing volumes and typical seasonal effects of the aggregates business caused by peak construction demand of the summer period. McCloskey has approx. 900 employees in Canada, the United States and Northern Ireland.
“We are proud of the growth achieved in a competitive market. I know that joining Metso is the right move for all our customers, employees, dealers and business partners. The combination of our unique focus on products and people and Metso’s global resources will help create even better solutions for our customers,” says Paschal McCloskey, founder, president and CEO of McCloskey.
The enterprise value of the transaction is $420 million payable at closing with an additional profitability based earn-out consideration of up to $35 million for the two-year period after closing. The transaction is expected to be positive for Metso’s earnings per share in 2020. McCloskey will be reported in Metso’s minerals segment.
To ensure financing for the acquisition, Metso has agreed on a bilateral loan from Nordea Bank Abp. The loan has a maturity of two years and includes an option to extend the maturity by one year.
The acquisition is subject to customary closing conditions, including anti-trust approvals. Closing is expected to take place during Q4 2019.
Metso is a world leading industrial company offering equipment and services for the sustainable processing of natural resources in the mining, aggregates, recycling and process industries. With its unique knowledge and innovative solutions, the company helps customers improve their operational efficiency, reduce risks and increase profitability.
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