The total acquisition price amounts to approximately $64.6m. The net debt amounts to approximately $5m, which gives a total enterprise value of approximately $70m. MMH Holdings, Inc. will be consolidated into the KCI Konecranes Group figures as of June 1 2006. Operationally, MMH Holdings, Inc. continues as an independent entity within the KCI Konecranes Group.
As Hoist revealed in its latest issue, Konecranes originally bought 59.2% of the company – on 19 May – before upping its stake to 74.5% just seven days later.
The original consideration amounted to around $38.5 million, Konecranes reported. The consideration for the second 15.3% stake amounted to a further $9.9m. Then, a further $10.3m worth of shares took its acquisition to 90.9%.
The acquisition ends the three-year legal wranglings between Morris Material Handling and Konecranes Inc about competition for aftermarket parts, currently scheduled for trial in August. In the case, Konecranes sued for the return of a deposit of $250,000 it paid Morris during the initial stages of a previous acquisition that fell through.
Meanwhile, KCI Konecranes has raised its sales growth guidance for year 2006 to exceed 35% over 2005 compared to the previous guidance of over 25%. The revision to previously announced guidance is primarily the result of the acquisition of MMH Holdings, Inc. Furthermore, KCI Konecranes sees continued good market conditions and currently no signs of slow down in market demand.
Konecranes Inc.’s subsidiary, HMM Acquisition Corp., further increased its stake in MMH Holdings, Inc. to 96.7% and then completed a short form merger as a result of which Konecranes, Inc. now owns 100% of MMH Holdings, Inc. shares.
Morris Material Handling Inc. and its subsidiaries (MMH) had annual sales of approximately $170m in fiscal year 2005, which ended 31 October 2005. First half of fiscal year 2006 sales were $102m, with an operating profit of $5.5m (5.4% of sales).
MMH is expected to generate sales of approximately Eur 90m for the period June to December 2006, with an estimated EBITDA margin of 8% and an EBIT margin of 6%. The current order book stands at approximately Eur 77m.
The acquisition is expected to be earnings per share (EPS) accretive before synergies, adding approximately Eur 0.03 to KCI Konecranes EPS in year 2006. On an annualised level the positive impact before synergies equals to Eur 0.06 per share. The acquisition will temporarily increase the KCI Konecranes Group’s gearing and lower the solidity, but this effect is expected to be mitigated by positive future cash flows.
With over 120 years of history in North America, Morris Material Handling, Inc., is a recognised player in the maintenance service and overhead crane industry. The addition of MMH’s product ranges especially for the steel industry complements KCI Konecranes’ offering. The acquisition also brings new opportunities for growth in Maintenance Services through the large installed base of MMH cranes. Through its subsidiaries MMH has local operations in Canada, Mexico and Chile.
KCI Konecranes will report its half year 2006 results on Thursday, 3 August 2006.
Preceding the initial announcement, Konecranes made an interesting change in personnel. Previously, Tom Sothard had two roles as both head of global maintenance services and KCI Konecranes Americas region. However, the company announced the appointment of Hannu Rusanen as president of the maintenance and services business area, leaving Sothard to focus purely on his role in the region concerned with Morris Materials Handling. For the present, Rusanen will also continue in his current position as head of the Nordic region.
Morris Materials Handling Inc is based in Oak Creek, Wisconsin and is the licensee of the P&H brand. Morris emerged from Chapter 11 bankruptcy protection in 2001.
