Canadian Cats Combine
By Jack Burke28 August 2017
Toromont Industries Ltd. will acquire the businesses and net operating assets of fellow Canadian Caterpillar dealer Hewitt Group for (CAN)$1.0177 billion.
Toromont operates through two business segments: the Equipment Group and CIMCO refrigeration. The Equipment Group is the Caterpillar dealer with a network of 34 branches in Ontario, Manitoba, Newfoundland and selected regions of Labrador and Nunavut. The group also has the Metso and Masaba crushing and screening equipment lines.
Toromont Energy’s core business is the supply, construction and operation of high-efficiency power systems up to 50 MW, using Caterpillar’s power generation technologies. Toromont Energy operates plants that supply energy to hospitals, district energy systems, and industrial processes. The plants are fueled by natural gas, landfill gas, biogas and diesel fuel in remote locations.
Hewitt Equipment Ltd. is the authorized Caterpillar dealer for the province of Québec, Western Labrador and the Maritimes, as well as the Caterpillar lift truck dealer for most of Ontario. Hewitt is also the MaK dealer for Québec, the Maritimes and the Eastern seaboard of the U.S., from Maine to Virginia.
The deal includes (CAN)$917.7 million cash plus the issuance of 2.25 million Toromont shares (nominally $100 million based on 10 day average share price as at signing) for a total consideration of $1.0177 billion (Canadian). The transaction is expected to close by mid-October, 2017, subject to the timing of certain regulatory consents, including TSX approval, and customary closing conditions.
Upon close of the acquisition, Toromont’s Caterpillar dealership will operate 120 branches in Nunavut, Manitoba, Ontario, Québec, New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland & Labrador. Toromont expects to maintain existing facilities and under its decentralized business model, regional leadership will continue to run their businesses.
“We are very proud to have the Hewitt Group join us and are privileged to be taking on the stewardship of this excellent business and building on the family legacy,” said Scott J. Medhurst, Toromont’s president and CEO. “We intend to add to its position of strength by investing in people, facilities, technology and rental fleets. Our position will allow us to better capitalize on organic growth opportunities given the recovery of the mining sector that we are currently experiencing and the promise of significant infrastructure investment. We look forward to working with key members of Hewitt’s leadership team.
“The acquisition delivers a substantial growth opportunity, allowing us to expand into the significant Québec, Western Labrador and Maritime markets, and strengthens our expertise in the mining, construction, power systems and forestry sectors,” Medhurst said.