Terex completes $2B purchase of Environmental Solutions Group

July 22: Connecticut-based Terex has signed a definitive agreement to buy Environmental Solutions Group from Dover in a $2 billion all-cash deal, the buyer announced Monday. The deal will shift ownership of leading refuse collection equipment brands, including Heil, Soft-Pak, 3rd Eye and Curotto-Can.

In a presentation to investors Monday morning, Terex reported ESG is the top provider of waste collection and compaction equipment in North America today with more than 60 dealer locations. ESG reported about $750 million in revenue in 2023, according to a release announcing the deal. The group’s business is 72% equipment, 18% aftermarket solutions and 10% digital solutions, according to the investor presentation.

The deal values ESG at 8.4 times its expected earnings before interest, taxes, depreciation and amortization for the year. Terex, a materials processing machinery manufacturer working in several sectors, expects the deal will add to its margins and reduce its capital intensity, increasing the amount of free cash flow Terex generates. The buyer anticipates $25 million in cost synergies to be realized by the end of 2026.

"ESG will add a non-cyclical, financially accretive, and market-leading business to Terex" portfolio with tangible synergies in the fast-growing waste and recycling end market,” Terex President and CEO Simon Meester said in a statement. “In addition, ESG is led by a world-class management team and has a strong track record of operational excellence.”

ESG was formed by Dover in 2010 via the combination of Heil Environmental, Marathon Equipment and Bayne Machine Works. The company had previously acquired Heil in 1993 and most recently acquired Soft-Pak, adding it to the ESG group in 2020.

The publicly traded portfolio company is based in Illinois, but it set ESG's headquarters in Chattanooga, Tennessee. Patrick Carroll, who served as president of Terex Utilities before joining Dover in 2005, has served as president and CEO of ESG since it was formed. Carroll said he intends to continue that work under Terex.

"Terex and ESG have highly aligned values and a shared commitment to best-in-class service, innovation, and most importantly, safety for every community we serve, making this transaction a strong fit," said Carroll in an emailed statement. "Joining a best-in-class organization with global presence will allow us to further accelerate our growth opportunities. Our team is thrilled to be joining Terex."

Terex plans to combine its existing utilities group with ESG to form a new environmental solutions business segment. It expects the deal to close in the second half of this year subject to regulatory approvals. Terex's next earnings call is on July 31.