On the Table
Nov 21, 2008
The economic impact of the past few months may hit machinery companies in a wave of consolidation.
As predicted by one Wall Street analyst
, the conditions may be right for publically traded machinery businesses to buy each other out. The targets will come into focus after the liquidity crisis eases, but the likely companies for acquisition are those with stretched balance sheets and/or aren’t well-diversified.
The candidates for matching up with impacts in the ag machinery biz:
- Caterpillar acquiring AGCO Corp, which would inverse the transaction that happened in 2002 when AGCO bought the Challenger line of tractors from CAT and carved out all ag-specific machinery from the Caterpillar portfolio.
- Deere acquiring Lindsay Corp, which is inline with Deere’s growing irrigation business. John Deere Water Technologies was established in 2006 and operates in 75 countries
Other machinery companies:
- Caterpillar and Joy Global Inc. (Joy Global makes heavy-duty mining equipment, which could diversify Caterpillar's product spectrum)
- Deere and Terex Corp. (Terex has a broad offering of construction, quarrying and other equipment that would add onto Deere's non-ag portfolio)
- Paccar or Caterpillar and Oshkosh, Corp. Paccar makes Kenworth, Peterbilt and DAF light/medium/heavy-duty trucks. Oshkosh is a speciality truck manufacturer that would add niche market products to either Paccar or Caterpillar.
- Illinois Tool Works and Manitowoc. Illinois Tools Works is a global manufacturer of industrial components, and the company could benefit from pairing up with Manitowoc's crane business.
- Illinois Tool Works and Lincoln Electric Holdings Inc. Illinois Tool Works could find a match with adding Lincoln's welding products to its offering.
- Parker-Hannifin and Crane Co. These two companies could merge their motion/control technology focus and niche industrial products.