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A big deal for Toro

2/15/2019
The Toro Company has entered into an agreement to acquire privately-held The Charles Machine Works, Inc. in a $700 million cash deal.

Based in Perry, Okla., Charles Machine Works designs, manufactures and sells a range of products to cover underground pipe and cable, including horizontal directional drills, walk and ride trenchers, utility loaders, vacuum excavators, asset locators, pipe rehabilitation solutions and after-market tools.

Charles Machine is also the parent company of Ditch Witch, among other leading brands of underground construction equipment. The company generated revenues of approximately $725 million in 2018.

The transaction is subject to regulatory approvals and closing conditions and anticipated to close before the end of Toro’s fiscal 2019 third quarter.

“The addition of Charles Machine Works will further strengthen our portfolio of market-leading brands supported by talented employees, a commitment to innovation, a best-in-class dealer network and long-standing customer relationships,” said Richard Olson, Toro chairman and CEO. “As an organization, Charles Machine Works aligns well with and will contribute to our own strategic priorities of profitable growth, operational excellence and empowering people.”

Olson noted that the acquisition of Charles Machine Works will expand Toro’s overall business into an adjacent category “that is attractive given the potential for growth in addressing both aging infrastructure that is currently in place and new infrastructure that will be needed to support next generation technologies like 5G.”

“Our success is the result of years of hard work and an unwavering commitment to developing innovative solutions for customers,” said Rick Johnson, Charles Machine Works CEO. “From developing the world’s first service line trencher in Perry, Okla., to today’s robust Ditch Witch dealer network, our family of companies is well-positioned to join The Toro Company’s family of brands. We look forward to building upon our founder’s legacy of best-in-class offerings in the expanding underground construction market.”

Toro expects to finance the transaction with a combination of cash on hand and debt, including from additional financing arrangements and borrowings under its existing credit facility.

J.P. Morgan Securities LLC acted as financial advisor to Toro and Fox Rothschild LLP and Latham & Watkins, LLP acted as Toro’s legal counsel. Bank of America Merrill Lynch and J.P. Morgan Chase Bank, N.A. have provided committed debt financing to Toro for the transaction. McAfee & Taft A Professional Corporation, acted as Charles Machine Works’ legal counsel.
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