Komatsu is set to expand聽its offering in the road building equipment sector following the acquisition of Astec Industries' road construction division, marking the Japanese manufacturer's first entry into the paving market.
The transaction, which carries an enterprise value of $75m (拢58m approx), will see subsidiary Komatsu America take over the Roadtec and Carlson brands. Subject to customary closing conditions, the deal is expected to complete on 1 January.
Based in Chattanooga, Tennessee - close to Komatsu's existing US factory - the Roadtec business designs, manufactures and supports equipment for road construction and resurfacing. Its product range covers highway-class and commercial-class asphalt pavers, paver screeds, Shuttle Buggy material transfer vehicles and cold planers, alongside aftermarket parts and rebuild services. Astec reports that the division generates approximately $145m in annualised revenue.
Komatsu claims the newly acquired lineup will complement its existing portfolio of dozers, excavators, motor graders, wheel loaders and haul trucks to provide a more comprehensive suite of machinery for road building applications. While the manufacturer previously offered road recyclers, stabilisers, cutters and vibratory rollers in select markets up until 2013, it has never before competed in the paving sector.
For Astec Industries, the divestiture sheds what the firm describes as a loss-making operation. The company states that offloading the division is expected to eliminate associated operating losses and prove accretive to its earnings per share.
Astec expects to realise roughly $65m in net proceeds from the sale. The firm reports that it intends to use these funds to strengthen its balance sheet, giving it greater flexibility to invest in its core asphalt, aggregates and concrete platforms, as well as to pursue future strategic acquisitions.