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- Terex buys Environmental Solutions Group (ESG) for $2.0 billion, enhancing its waste and recycling market presence.
- Expected $25M in cost and revenue synergies by 2026; purchase reduces cyclicality and increases financial accretion.
- Acquisition expands Terex’s North American market, boosting addressable market to $40B.
Terex Corporation (NYSE: TEX) has announced the acquisition of Environmental Solutions Group (ESG) from Dover Corporation (NYSE: DOV) for $2.0 billion in cash. After accounting for expected tax benefits of approximately $275 million, the net purchase price is $1.725 billion. ESG specializes in refuse collection vehicles, waste compaction equipment, and digital solutions.
“This acquisition marks an exciting milestone in our transformation,” said Terex President and CEO, Simon Meester. “ESG will add a non-cyclical, financially accretive business with tangible synergies in the fast-growing waste and recycling market.“
Strategic Advantages:
- Scale & Cyclicality: ESG’s consistent growth reduces Terex’s cyclicality.
- Financial Benefits: ESG’s EBITDA margin, including synergies, is expected to add 130 basis points of margin accretion.
- Synergies: $25 million in identified synergies by 2026 from procurement, supply chain efficiencies, and commercial initiatives.
- Market Leadership: ESG holds the #1 position in refuse collection vehicles and waste compaction equipment in North America.
- Expansion: Terex’s North American market exposure increases to 65%, expanding its global market opportunity to $40 billion.
- Capital Efficiency: ESG’s operating model will improve Terex’s free cash flow accretion.
The acquisition, set to close in the second half of 2024, awaits regulatory approvals. Terex plans to fund the transaction with a combination of cash on hand and debt financing from UBS Investment Bank, expecting a 2024 net leverage ratio of 2.2x.
Related Article: Bower Launches AI-Powered Recycling App in 170 Countries, Saving 7 Million kg of CO₂
Terex will create a new Environmental Solutions segment, combining ESG with Terex’s Utilities business, targeting growth markets like electrification, circularity, and energy transition.
Simon Meester added, “We look forward to welcoming the ESG team to Terex and driving long-term, sustainable value for all our stakeholders.“