Volvo to Buy Ingersol Rand Road Construction Equipment Unit for $1.3B in Cash

Volvo, the world's second biggest truckmaker, said this morning it has agreed to buy Ingersoll Rand's road construction equipment unit for $1.3 billion in cash. Volvo's construction equipment division is its second-largest; the Ingersoll Rand division brings with it $864 million in revenue and $101m in operating income as of last year. The acquired unit makes heavy compactors, asphalt pavers and milling machines, and Volvo said in its press release it provides favorable growth opportunities. It also includes 20 North American dealerships and distribution centers in Europe and Russia which will leverage Volvo's sales of compact equipment. Anders Bruzelius of Swedbank in Stockholm said the price was high and fails to address Volvo's dependency on North America and Europe. Volvo shares were down 2.4% in Stockholm on the news. The deal is expected to close in Q2, subject to regulatory approval.

Sources: Press Release, Bloomberg, MarketWatch
Commentary: Shedding Light on the Nordic States: Small, But Powerful • Ingersoll-Rand Trying To Recover From Housing Slowdown
Stocks/ETFs to watch: Volvo (VOLV), Ingersoll-Rand Co. Ltd. (IR). Competitors: Caterpillar Inc. (CAT), Hanover Compressor Company (HC), Terex Corp. (TEX), Briggs & Stratton Corp. (BGG)

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