Toyota Industries Corp. (6201), a parts- and-assembly affiliate of Japan’s largest carmaker, agreed to buy U.S. forklift components maker Cascade Corp. (CASC:US) for $759 million in cash to expand in the materials-handling business.
The bid is worth $65 a share for all of Cascade, the world’s biggest supplier of materials-handling attachments for lift trucks, Kariya, Japan-based Toyota Industries said in a statement yesterday. The offer is 18 percent more than Cascade’s closing price on Oct. 19, the last trading day before the statement.
Toyota Industries’s biggest acquisition since 2000 gives the parts maker control of a supplier to Caterpillar Inc. (CAT:US), the world’s largest maker of construction and mining gear, as demand for heavy equipment expands in emerging markets. The deal brings announced overseas acquisitions by Japanese companies this year to $97 billion, exceeding the total for all of 2011, as the yen trades near a postwar high and a stagnating domestic economy makes overseas markets more attractive.
“This looks like a positive step forward for Toyota Industries,” Satoru Takada, a Tokyo-based auto analyst at Toward the Infinite World Inc., a securities research company, said by phone today. Cascade’s presence as a global brand “should allow Toyota Industries to expand in emerging markets while maintaining a competitive price for its products.”
The offer is about 19 times Cascade’s free cash flow (CASC:US) as of the end of last fiscal year, compared with the median of about 77 times for eight mining and construction equipment maker deals over the past five years, according to data compiled by Bloomberg. The deal also values the company at 8 times earnings before interest, depreciation, taxes and amortization for the 12 months ended Jan. 31, compared with the median of 10 for 11 industry deals in the past five years, the data show.
Cascade tripled net income to $63 million for the 12 months ended Jan. 31, from $21.4 million a year earlier, data compiled (CASC:US) by Bloomberg show. Sales rose 30 percent in the year to $535.8 million, making Toyota Industries’s offer worth 1.4 times sales, compared with the 1.8 times median of 14 deals in the past five years, the data show.
Toyota Industries, which counts Toyota Motor Corp. (7203) as its biggest shareholder, gained 0.6 percent to 2,323 yen at the close in Tokyo trading. Cascade, based in Fairview, Oregon, jumped 18 percent, its biggest gain since June 2011, to close at $64.97 yesterday, after the announcement.
Nomura Holdings Inc. is advising Toyota Industries, while Bank of America Merrill Lynch is working with Cascade. Cascade’s board of directors has approved the offer, according to the statement.
Cascade may help Toyota Industries fend off competitors, including Kion Group GmbH, the world’s second-largest maker of forklifts. Kion is planning an initial public offering and intends to overtake Toyota Industries as the global leader in forklifts by 2015 or 2016, according to Kion Chief Executive Officer Gordon Riske.
Goldman and KKR, the buyout firm run by Henry Kravis and George Roberts, agreed in August to sell 25 percent of Kion to Weichai Power Co., China’s biggest maker of heavy-duty trucks.
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