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Fly News Breaks for February 22, 2019
TEX, ASTE
Feb 22, 2019 | 09:48 EDT
Terex (TEX) delaying its earnings release led to considerable speculation on possible acquisitions, Baird analyst Mircea Dobre told investors earlier in research note. The analyst believes Astec Industries' (ASTE) "unique circumstances" and "apparent strategic fit" within the Terex portfolio "are worth contemplating." Astec would add asphalt plants, with leading market share in North America, as well a mobile pavers to Terex's Materials Processing segment, Dobre points out. Further, the addition of Astec could give Terex room to potentially altogether divest Crane down the line, with the proceeds used to reduce the leverage resulted from the acquisition, the analyst adds. Regarding the "unique circumstances," Dobre notes Astec's s CEO Ben Brock resigned on January 22, its shareholders have been pushing for improved performance, and that the activist investor on Terex's board was an Astec shareholder. Should Terex pay a multiple for Astec in-line with historical median transaction valuations in the space, it would imply a 27% premium to Astec's current price or $50 per share, according to Dobre. Shares of Astec are up 44c to $39.89 in early trading while Terex is down 3c to $35.54.
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