Terex Corporation completes $2.0 billion acquisition of Environmental Solutions Group

Terex Corporation has completed the acquisition of Environmental Solutions Group (ESG) from Dover Corporation. The company anticipates that ESG will drive increased revenue growth, free cash flow, and earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, along with EPS accretion.

The transaction is expected to be double-digit percentage adjusted EPS accretive in 2025, with meaningful growth projected over the following years. The all-cash transaction was for $2.0 billion, or $1.725 billion when adjusted for the present value of expected tax benefits of approximately $275 million.

The acquisition represents approximately 8.4 times the 2024E EBITDA, including expected run-rate synergies. With ESG, Terex will now derive 67 percent of its total revenue from North America, an increase from 61 percent based on trailing 12 months results ending during the second quarter of 2024.

Terex completes Environmental Solutions Group acquisition

ESG has demonstrated a track record of consistent growth, delivering a 7 percent long-term organic revenue compound annual growth rate (CAGR) over the past 10 years. The company holds the #1 position in North America for refuse collection vehicles, waste compaction equipment, and associated parts and digital solutions.

ESG's product brands include Heil, Marathon, Curotto-Can, Bayne Thinline, and Parts Central as well as digital solutions offerings such as 3rd Eye and Soft-Pak. The products and services offerings include equipment, digital, and aftermarket offerings, and are complementary to Terex's businesses. The acquisition is expected to allow Terex to expand its customer base, providing customers with a broader suite of environmental equipment solutions, and realizing economies of scale. 

Simon Meester, president and CEO of Terex, said: "We're delighted to welcome ESG into the Terex family of businesses. ESG is a non-cyclical, financially accretive, market-leading business that will complement and strengthen Terex's portfolio with synergies in the fast-growing waste and recycling end market. ESG is led by a world-class management team and has a strong track record of operational excellence. We look forward to working with ESG to drive long-term, sustainable value for all our stakeholders."

Meester added that Patrick Carroll, president of ESG for the past 14 years, will continue in that role. Carroll brings extensive experience in leading manufacturing businesses, having served as president of Terex Utilities from 2001 through 2005. 

Julie Beck, Terex SVP and CFO said: "This acquisition significantly strengthens Terex's portfolio and creates a path for accelerated, sustainable growth. ESG has demonstrated a sustained track record of resilient, high single-digit organic growth through the cycle. Its EBITDA margin including run-rate synergies is expected to add 140 basis points of margin accretion. ESG's efficient operating model with low net working capital will drive a meaningful improvement in free cash flow accretion. And finally, Terex expects ~$25 million of identified synergies to be achieved by the end of 2026.

Mr. Carroll said: "At ESG, our vision has always been to improve the lives of our team members, our customers, and our communities. We are looking forward to becoming part of Terex, because we see it as a great cultural fit with opportunities to expand our positive impact. We are looking forward to greater scale and access to new markets."