Columbus McKinnon Corp., moving to bolster its presence in the European markets and expand its hoist business, has agreed to acquire a German crane components manufacturer in a deal worth $240 million.
The acquisition of Stahl Crane Systems will make Columbus McKinnon the world's second-biggest hoist company and will expand the Amherst material handling equipment company's product line to include explosion-protected hoists and components used by miners and in oil and natural gas exploration and the chemical processing industry.
Columbus McKinnon is buying Stahl from Konecranes, a Finnish crane builder that was forced to put Stahl up for sale because of anti-trust issues stemming from its plans to buy a material handling business from Terex Corp.
Timothy T. Tevens, Columbus McKinnon's president and CEO, said Stahl is "an ideal complement" to the company's European presence, adding Stahl's wire rope and electric chain hoists to the company's strong European market position for handheld hoists.
Columbus McKinnon looked at buying Stahl in 2001, but couldn't complete a deal in a difficult financing environment, Tevens said. "This is something we've had our eye on for a while," he said during a conference call Wednesday.
"We think that we are buying at the bottom of the cycle," with interest rates low, the Euro at a depressed level compared with the U.S. dollar, and oil and natural gas prices stabilizing at prices above their 2014 lows, said Gregory P. Rustowicz, Columbus McKinnon's chief financial officer.
Stahl, which has about 650 employees, had about $166 million in sales during the 12 months that ended in September, with operating cash flow of about $31 million. The acquisition is expected to increase Columbus McKinnon's annual sales, which were about $616 million before the deal, by about 26 percent.
Stahl gets about 71 percent of its sales from markets in Europe, the Middle East and Africa, along with 16 percent from the Americas and 13 percent from Asia.
Columbus McKinnon said it expects to generate cost savings of about $5 million during the upcoming fiscal year and about $11 million during the fiscal year after that. The company said it will book one-time transaction costs of $8 million to $9 million during the upcoming fiscal year and one-time restructuring costs of about $6 million.
Columbus McKinnon said it expects Stahl to add about 31 cents per share to its earnings beginning in the fiscal year that begins in April 2018. If Stahl hits certain earnings targets this year, the price could rise by another $6 million to $246 million. The acquisition is expected to close by the end of April.
Columbus McKinnon, which is paying cash to buy Stahl, plans to restructure its debt as part of the deal, expanding its borrowing capacity to $570 million. While that will leave Columbus McKinnon with just under $500 million in total debt, or about 60 percent of its total capitalization, Tevens said the company plans to focus on paying down that debt in the coming years. He expects to pay down the debt by $25 million to $30 million during the fiscal year that begins in April 2017 and by another $45 million to $50 million during the fiscal year that starts in April 2018.