Stellex Sells Morbark to Alamo Group

Stellex Capital Management has agreed to sell Morbark to publicly traded Alamo Group for $352 million.

Morbark is a maker of equipment for the forestry, recycling, tree care, sawmill and biomass markets. The company’s products include whole tree and waste wood chippers, aerial trimmers, brush chippers, horizontal and tub grinders, sawmill equipment, and material handling systems.

Company-owned brand names include Morbark, Rayco, Denis Cimaf and Boxer Equipment. Morbark, led by CEO Dave Herr, was founded in 1957 and operates a 1.1-million-square-foot manufacturing complex north of Lansing in Winn, MI. The company, with 720 employees, also has subsidiary operations in Wooster, OH and Roxton Falls, QC (www.morbark.com).

Morbark’s sales were just more than $225 million in 2018 and the company had trailing twelve-month sales, through July 2019, of $233 million. Since Stellex’s acquisition of Morbark in March 2016, the company’s revenue has nearly doubled, EBITDA has increased by over 200 percent, and the employee headcount has increased by over 200.

Under Stellex ownership the company completed two add-on acquisitions with the buys of Rayco Manufacturing, a Wooster, OH-based maker of stump cutters, crawler trucks, forestry mulchers, multi-tool carriers, brush chippers and aerial trimmers, in October 2017; and Denis Cimaf, a Roxton Falls, QC-based maker of industrial brushcutters and mulchers, in December 2018.

“Our investment in Morbark demonstrates our ability to rapidly transform family-run industrial equipment businesses into best-in-class providers within their industry,” said David Waxman, a managing director at Stellex. “We would like to thank the Morbark team for their strategic vision, dedication, and execution over these past three and a half years.”

Stellex invests from $25 million to $100 million in United States or Europe-based companies with enterprise values from $50 million to $500 million and revenues greater than $100 million. Sectors of interest include manufacturing and basic industry; industrial and business services; defense, aerospace and government services; automotive; consumer products; and distribution and transportation. Stellex has offices in New York and London (www.stellexcapital.com).

“We would like to thank Stellex for recognizing Morbark’s potential and investing both time and capital in order for us to achieve our strategic vision,” said Mr. Herr. “Together with Stellex, Morbark has greatly enhanced our operations by implementing lean initiatives and best-in-class manufacturing practices that have resulted in new and improved product redesigns, significant reduction in lead times, and improved delivery performance. We are grateful for our time working with Stellex and look forward to this next chapter as part of Alamo.”

Alamo Group (NYSE: ALG) designs, manufactures, and services a range of equipment including truck and tractor mounted mowing and vegetation maintenance equipment, street sweepers, snow removal equipment, excavators, and vacuum trucks. The company was founded in 1969 and has approximately 3,650 employees with 29 facilities in North America, Europe, Australia and Brazil. Alamo Group is headquartered near San Antonio in Seguin, TX (www.alamo-group.com).

“Morbark is a well-run, profitable, and growing company in a sector that has been steadily improving,” said Ron Robinson, CEO of Alamo Group. “Their products expand and complement our range of vegetation maintenance equipment in an adjacent market. We also believe this acquisition will allow us to accelerate Morbark’s international growth plans with Alamo’s existing presence in areas such as Europe as well as select markets such as Brazil and Australia.”

Alamo is working with its current banking group to expand its current credit facilities to accommodate the acquisition of Morbark.

Baird was the financial advisor to Stellex and Morbark on this transaction which is expected to close in the fourth quarter.

© 2019 Private Equity Professional | September 16, 2019

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