France’s Fayat Group has agreed to buy the road construction equipment division of Atlas Copco, including the Dynapac brand of compaction, paving and milling equipment, after the Swedish group announced a major shakeup of its operations
Atlas Copco’s road construction equipment division has sales and service operations in 37 countries and employs 1,265 people, with production units in Sweden, Germany, Brazil, India and China. The division recorded revenues of approximately $327m in 2016.
The announcement comes shortly after Atlas Copco proposed major changes, including the splitting of the group into two listed companies – for mining/construction and industry, respectively – while Mats Rahmström has been approved to take over as president and CEO from 27 April.
The acquisition is subject to regulatory approvals and Fayat said it expected the deal to be completed during the second quarter of 2017.
Jean-Claude Fayat, president of Fayat Group, said, “We are very happy to integrate Dynapac, a highly recognised brand, into our group. We will leverage its expertise and technologies together with our existing portfolio to continuously develop equipment that closely addresses our customers’ needs.”
Fayat is already active in the road construction equipment market through its companies Bomag, Marini, Marini-Ermont and SAE, Secmair and Breining.
The planned divestment by Atlas Copco is said to be because the division did not have the economies of scale to become number one or two in this market segment. An impairment charge of $226m, primarily related to intangible assets, is now expected to be incurred in the group’s 2016 accounts.
In terms of the split of the remaining Atlas Copco company, as new company, with the working title of NewCo, will be formed to focus on civil engineering customers, including the existing mining and rock excavation technique business area and construction tools division.
It will have around 12,000 employees, revenues of roughly $3.16bn and an operating margin of about 16% for the 12 months ended September 30, 2016.
Atlas Copco itself will focus on industrial customers, and include the compressor technique, vacuum technique and industrial technique business areas, as well as the portable energy division and specialty rental division.
It will have around 33,000 employees, revenues of roughly $8.34bn and an operating margin of about 20% for the 12 months ended September 30, 2016.
Hans Stråberg, chair of the board of directors of Atlas Copco, said, “Long-term shareholder value will be created by splitting the group into two separate companies. Both businesses are global leaders in their respective fields and will benefit from a more focused management responsibility.”