Terex (TEX) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of ESG adds a market-leading, non-cyclical business, expanding into the North American waste and recycling segment and amplifying growth opportunities.

• ESG's strong brand, recurring revenue, digital solutions, and best-in-class margins complement existing offerings and reduce business cyclicality.

• ESG's consistent 7%+ organic revenue CAGR over the past decade supports long-term growth ambitions.

• The deal expands the addressable market to $40 billion, with North America revenue exposure increasing to 65%.

• ESG and the acquiring company share values in service, innovation, and safety, with strong leadership continuity.

Financial terms and conditions

• $2 billion all-cash transaction, adjusted to $1.725 billion after $275 million in expected tax benefits.

• Purchase price represents 8.4x 2024 estimated EBITDA, including run-rate synergies.

• Fully committed financing through cash, Term Loan B, and senior unsecured notes.

• Net leverage expected at 2.2x by end of 2024, below 2x by end of 2025.

• Adjusted EPS expected to be double-digit percentage accretive in 2025, with meaningful increases thereafter.

Synergies and expected cost savings

• $25 million in annual run-rate synergies targeted by end of 2026, mainly from procurement, supply chain, and commercial initiatives.

• Synergies include operational efficiencies, digital cross-selling, and leveraging dealer networks.

• Procurement synergies expected from overlapping suppliers and materials (e.g., steel, hydraulics).

• ESG's efficient operating model expected to improve free cash flow and reduce capital intensity.

• Additional upside expected from digital offerings and cross-selling opportunities.