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JLG Industries Sells Gradall to Alamo Group for $39.4M

Thu February 09, 2006 - National Edition
CEG



Gradall has been sold to the Alamo Group Inc.

The $39.4-million sale by JLG Industries Inc., which had owned Gradall since 1999, was announced at an employee meeting at the plant Feb. 3.

Alamo becomes the ninth owner of Gradall excavators — generally recognized as the world’s first hydraulic excavator and now the only excavator manufactured entirely in the United States.

“This is an exciting development for Alamo and one that will be synergistic to our business,” said Ron Robinson, Alamo Group’s president and CEO. Robinson attended the announcement meeting with employees, held on a loading dock at the plant.

The sale includes the 430,000-sq.-ft. manufacturing facility in New Philadelphia, OH, and all related equipment, machinery, tooling and intellectual property.

Gradall manufacturing operations will remain in New Philadelphia. According to a company news release, components for other JLG products will continue to be manufactured there, “at least on a temporary basis.”

A majority of the 400 Gradall workers will be retained.

The purchase price is subject to adjustments, according to terms of the Asset Purchase Agreement, and is expected to be accretive to Alamo’s earnings in 2006. The purchase is being funded by Alamo’s expanded line of credit.

In addition to the purchase agreement, Alamo and JLG have executed a supply agreement covering components for JLG’s telescoping material handler product lines that currently are being manufactured at the New Philadelphia facility.

“Over half of Gradall’s sales are to governmental buyers and related contractors for grading and maintenance along rights of way, which makes it an ideal fit with our Industrial Division. This division sells a variety of products including mowing equipment, street sweepers, road patchers, snow removal and other equipment for maintenance along roads and rights of way.

“With Alamo and Gradall together, we feel we can expand our market coverage and mutually enhance our sales potential, making this an excellent opportunity for the Alamo Group. Like many of our products, the Gradall excavator, with its telescoping boom arm arrangement, is a high quality product that serves a unique niche in the market.”

Management of the Gradall operation will be assumed by veteran Gradall professionals who are already on site.

“We are pleased to announce that Michael Haberman will be president of Gradall,” said Robinson. “Mike has been with Gradall for over 18 years and most recently served as JLG’s vice president of excavator products.”

Haberman said he is excited about Gradall’s future with Alamo.

“This transaction represents excellent news for the employees of Gradall and for the economy of Tuscarawas County and beyond. Gradall has been an important corporate citizen in this community for over 55 years, including our use of dozens of local businesses, and it’s great that the positive Gradall impact will continue and grow even stronger again.”

A JLG Industries news release noted that divesting of the Gradall excavator product line “is consistent with our strategy of focusing our efforts on our core access business and the proceeds from the sale will be used to continue implementing our growth strategy.”

“The Gradall excavator is a well known and highly respected niche product line, but it is not a core business for JLG,” said Bill Lasky, JLG’s chairman of the board, president, and chief executive officer. “With this ownership change, the New Philadelphia excavator team will find more opportunities to flourish and grow with a more closely aligned family of products.”

About Alamo

Alamo Group designs, manufactures, distributes and services equipment for right of way maintenance and agriculture. Products include tractor- and truck-mounted mowing and other vegetation maintenance equipment, street sweepers, agricultural implements, front-end loaders, backhoes and related aftermarket parts and service.

Founded in 1969, Alamo Group, based in Seguin, TX, already has more than 1,860 employees and 14 plants in North America and Europe.

Gradall’s History

Gradall has had a number of owners since the first machine was built in the early 1940s by two Cleveland road contractors, looking for ways to continue their business in spite of the loss of manpower to the military in World War II. The first machines featured a telescoping, tilting boom — still a traditional Gradall versatility advantage — mounted on a variety of undercarriages.

The product was purchased by Warner & Swasey Co. in Cleveland in 1945. Around 1950, a group of civic-minded New Philadelphia executives raised the funds to purchase the former American Sheet & Tin Co. plant in the city. Warner & Swasey acquired the property and established Gradall there as a separate division, buoyed by the need for productive equipment to build the nation’s interstate highway system through the 1950s.

In 1980, Bendix Corporation purchased Gradall, and in 1983, Allied Corp. purchased Bendix, including Gradall. Almost immediately after the Allied acquisition, Gradall was sold to a group of local executives who formed a partnership called GBKS.

ICM Industries, a Chicago consulting firm, purchased Gradall in 1985. The next owner was Morgan, Lewis, Githens & Ahn, a New York City investment firm that took the company public, selling shares but retaining a controlling interest.

JLG Industries acquired Gradall in 1999, marketing branded excavators and telehandlers and reorganizing the plant into separate entities involving sales, marketing and product support; manufacturing; and engineering including both excavator and telehandler product development.

Beyond the construction equipment industry and government applications, Gradall produces models especially for mining, metal mill maintenance, railway construction and components for the firefighting industry.

Gradall’s excavator and related equipment services revenues were approximately $75.6 million at the end of JLG’s fiscal year on July 31, 2005. CEG