Terex 'exits' road building machinery market

Terex to divest majority of its road machine business to Fayat Group

The shift from road building to security in the US after 9/11 is a factor in Terex's move.
The shift from road building to security in the US after 9/11 is a factor in Terex's move.

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Citing a shift in the United States from road building to security after the 2011 terrorist attacks, Terex Corporation has announced that it exiting its roadbuilding product lines, including asphalt pavers and plants.

Terex has entered into a contract to sell its road building operations in Brazil and certain product lines in the US to Fayat Group -  France's largest construction machinery group, and manufacturer of Bomag and Marini.

It will also exit the remainder of its US road building product lines, produced in Oklahoma City, and sell its business assets. The sale of its assets will be at a loss of approximately $15m.

In comments reported by the Stamford Advocate, Tom Gelston, vice president of investor relations, blamed the US government's shift in focus from road building to security after the 2001 terrorist attacks.

"It's always been a problem portfolio for us. It became a distraction from our core operation. It's losing between $30m and $40m in revenue per year," Gelston said.

Ron DeFeo, Terex chairman and CEO, said that the intention was to refocus on more profitable areas of the business.

“The decision to exit most of our roadbuilding product lines is another step in the repositioning of Terex. We continue to focus on improving our construction segment performance as well as the company’s overall returns on invested capital, and this transaction is part of that process,” said DeFeo.

Terex expect that the sale to Fayat will be completed in Q1 2013.

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