Twin Disc, Inc., the Racine, Wis. manufacturer of power transmission technology and equipment for marine and land-based applications, announced that it has entered into a definitive agreement to acquire Veth Propulsion Holding, B.V. and its wholly-owned subsidiaries, a supplier of main and auxiliary marine propulsion products.
The purchase price is approximately $58.6 million (€49.7 million) plus net cash. The acquisition is expected to be completed in July 2018 and is subject to typical closing conditions. For calendar 2018, Veth Propulsion is expected to achieve sales of $60 million (€51 million).
Headquartered in Papendrecht, Netherlands Veth Propulsion is a manufacturer of azimuth rudder propellers, thrusters and generator sets, and is a supplier and repairer of diesel engines. In December 2015, Veth Propulsion selected Twin Disc as its distributor for select Asian markets. This unique relationship expanded with a North American distribution partnership in 2016.
“As we celebrate our 100th anniversary, I am excited to announce the accretive acquisition of Veth Propulsion. Twin Disc has worked with Veth Propulsion for over two years and the companies share similar cultures based on providing customers with high-quality products and leading design, engineering, and manufacturing services,” said John H. Batten, president and CEO of Twin Disc. “Veth Propulsion strategically expands our global market opportunity, increases our size, scale, and scope within the marine industry, and diversifies our end-market penetration. This is part of our continual strategy to diversify our geographies, markets, and products.”
Batten added that the strategic fit of Veth Propulsion with Twin Disc further globalizes Twin Disc’s engineering talent and creates opportunities for faster marine and propulsion product development, including hybrid technologies. It also reduces Twin Disc’s dependence on oil and gas, with new technology and sales outside of this market. The acquisition also creates synergy opportunities through increased global sales, service and after-sales support of up to $2 million in operating income on an annual basis by fiscal year 202. And, finally, produces value creation opportunity, with strong earnings accretion and continued balance sheet flexibility
“Veth Propulsion has extensive experience in engineering and product development that will enhance our current product portfolio,” continued Batten. “Innovations like Veth Propulsion’s industry-recognized Hybrid Drive and Integrated L-Drive will open new markets and opportunities for growth for Twin Disc.”
Update: On July 3rd, Twin Disc announced it completed the acquisition for $60.8 million (€52.1 million).