Ingersoll-Rand Co. Ltd. announced today that it has agreed to sell its Road Development business unit to AB Volvo for cash proceeds of approximately $1.3 billion. The sale, which is subject to government regulatory approvals and other customary closing conditions, is targeted to close in the second quarter of 2007.
The Road Development business unit manufactures and sells asphalt-paving equipment, compaction equipment, milling machines and construction-related material handling equipment.
In 2006, Road Development generated net revenues of approximately $850 million, which included inter-company revenues of approximately $150 million. The sale includes manufacturing facilities in Letterkenny and Shippensburg, Pa.; Hameln, Germany; Wuxi, China; and Bangalore, India; as well as 20 distribution and service facilities in the U.S. The business includes approximately 2,000 people worldwide.
"The Road Development business has been a strong contributor to Ingersoll Rand's success for several decades and remains an industry leader with dedicated and talented employees," said Herbert L. Henkel, chairman, president and chief executive officer. "However, the business' markets and products do not fit within our transformed portfolio of diversified industrial businesses. I am confident that Road Development will benefit by joining a company sharing similar competencies and offering complementary products and services. We are pleased to have entered into this agreement with Volvo, which represents a strong strategic buyer for the business.
"The sale of the Road Development business reflects our strategy to transition away from capital-intense, heavy-machinery businesses and improves the company's efforts to consistently achieve aggressive financial objectives over the long term. To that end, we will use the proceeds to make acquisitions and fund innovation and new product development efforts that will generate strong revenue and earnings growth. In addition, we will continue to implement our previously authorized share repurchase program."
