Baton Rouge, La.-based H&E Equipment Services, Inc. has announced a definitive agreement to acquire Roanoke, Va.-based J.W. Burress, a privately owned construction equipment distributor serving the mid-Atlantic markets out of 12 locations. The acquisition is subject to the completion of Burress' 2006 audit, obtaining certain third-party consents, receipt of financing, closing of the acquisition no later than July 31, 2007, and other customary closing conditions.
Burress' principal business activity is sales of new and used equipment, which represents approximately 60 percent of the company's revenues. Burress represents Diamond Z, Doosan, Hitachi, Manitowoc, Grove and Terex, among other manufacturers. H&E Equipment does not anticipate that Burress will continue to represent Hitachi. The company believes that it will be able, through Burress, to expand and grow its relationship with other manufacturers with whom Burress currently does business and other manufacturers with whom the company has had discussions. Accordingly, the acquisition is not conditioned on continuing the Hitachi distributorship.
The estimated purchase price without Hitachi will be approximately $108.7 million, subject to adjustments, plus estimated assumed indebtedness of approximately $.4 million and will be financed through the company's existing senior secured credit facility. Should Burress continue to represent Hitachi, the Burress shareholders will have the opportunity to receive additional purchase price of approximately $12.9 million payable over three years. Burress had unaudited revenues of approximately $178 million for the year ended December 31, 2006. The sale, rental and service of Hitachi products accounted for approximately 28 percent of unaudited revenues. The transaction is expected to be accretive in 2007.
“Burress is one of the premier distributors of heavy construction equipment in the U.S. and has an outstanding reputation with the manufacturers they represent and the end users they serve,” said John Engquist, president and CEO of H&E. “This acquisition will expand our footprint contiguously throughout the mid-Atlantic region and affords us significant growth opportunities. Our ideal acquisition target is a distributor with strong retail sales and product support capabilities and a rental component that we can improve and grow significantly. Burress certainly fits this profile."
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