UpRight's Parent to Acquire Snorkel

The Tanfield Group Plc of the United Kingdom, manufacturer of UpRight aerial work platforms, announces that it intends to acquire the entire issued share capital of Snorkel Holdings Inc., St. Joseph, Mo., under the condition it raises $295.5 million.

The conditional agreement is to acquire Snorkel for $100 million, as well as assume approximately $25 million of its debt. The acquisition is to be satisfied with $95 million in cash, funded by the $295.5 million the Tanfield Group raises, and the sellers of Snorkel also are to receive 1,535,662 ordinary shares valued at 0.01 ($0.02) each, totalling $5 million, on the first or second anniversary of the completed acquisition.

Net proceeds of the money Tanfield raises will fund the cash portion of the acquisition; pay down Snorkel's debt, which will leave Tanfield debt-free; and provide Snorkel with additional working capital for growth and improve margins through more efficient purchasing. The extra cash also will provide the working capital needed to establish Tanfield's zero emission commercial vehicles in the United States. Tanfield said it expects to launch a U.S. version of the Smith Edison van and the Smith Newton truck in early 2008.

Darren Kell, UpRight's chief executive, told Lift and Access that aside from the UL Series, Snorkel and UpRight powered access equipment will be manufactured at Snorkel's plant in Elwood, Kan. The UL series will continue to be built in UpRight's existing Fresno, Calif., facility, which also will handle parts and service. A third plant, which will most likely be in Fresno, will be used to manufacture the zero emission commercial vehicles in the United States.

Snorkel has a significant sales presence in North America, Australia, and New Zealand, while UpRight has a distribution network concentrated in Western and Eastern Europe, Russia and the Baltics, the Middle East, and the Asia-Pacific region. According to Kell, Snorkel's New Zealand facility, where it manufactures its towable aerial lifts, was part of the acquisition, and Tanfield will leave everything there intact.

Tanfield's directors believe that following the acquisition, the company's access equipment will have a strong distribution and sales presence in North and South America, Austral-Asia, Europe, the Middle East and Asia-Pacific regions and will have manufacturing capabilities in Europe, the United States, and Austral-Asia. Tanfield also said it expects to benefit from global supply chain efficiencies.

Tanfield's directors believe that the geographic fit between Snorkel and UpRight is complementary. “There is very little overlap between the UpRight and Snorkel product ranges, presenting significant cross-selling opportunities in UpRight's core territories of Europe and Middle East and Snorkel's core markets of North America and the Asia-Pacific region,” Kell said.

In addition, Tanfield's directors also said that Snorkel's product range, which focuses on medium to large articulated and telescopic booms, is complementary to UpRight's small- to medium-sized aerial lift offerings. There is little product overlap, and Tanfield expects to benefit from cross-selling opportunities, with a comprehensive product portfolio enabling it to meet customers' requirements.

Kell said that branding is still up in the air, and they don't want to "make any rash decisions" about it. He added that they will be looking at it market-by-market and not taking a global approach to making any branding changes.

For the year that ended December 31, 2006, Snorkel had turnover of $131.49 million and achieved profit before tax of $9.65 million. Net assets at the time were $17.59 million. Tanfield expects the acquisition to bring marginal earnings for the company for the 2007 financial year and significantly enhancing thereafter.

Tanfield will be holding an Extraordinary General Meeting on July 23 with its directors and Cenkos Securities, the company's nominated advisor and joint broker, in order to pass a resolution that would enable Tanfield access to its share capital for the acquisition.