Toromont Industries Ltd., a diversified industrials company providing specialized capital equipment and ongoing support to customers in various sectors, today announced that it has entered into a definitive agreement to acquire the businesses and net operating assets of the Hewitt Group of companies in exchange for consideration of $917.7 million cash plus the issuance of 2.25 million Toromont shares (nominally $100 million based on 10 day average share price as at signing) for a total consideration of $1.0177 billion.
Hewitt Equipment Limited is the authorized Caterpillar dealer for the province of Québec, Western Labrador and the Maritimes, as well as the Caterpillar lift truck dealer for most of Ontario. Hewitt is also the MaK dealer for Québec, the Maritimes and the Eastern seaboard of the United States, from Maine to Virginia. All amounts are in Canadian currency.
"Acquiring Hewitt marks a very important milestone for Toromont and is beneficial to our customers, employees and shareholders on many levels," said Scott J. Medhurst, Toromont President and CEO. "The Hewitt family has built a world-class organization throughout much of Eastern Canada over many decades with a strong reputation for quality service among its customers. We are very proud to have the Hewitt Group join us and are privileged to be taking on the stewardship of this excellent business and building on the family legacy. We intend to add to its position of strength by investing in people, facilities, technology and rental fleets. Our position will allow us to better capitalize on organic growth opportunities given the recovery of the mining sector that we are currently experiencing and the promise of significant infrastructure investment. We look forward to working with key members of Hewitt's leadership team."
Mr. Medhurst added, "The acquisition delivers a substantial growth opportunity, allowing us to expand into the significant Québec, Western Labrador and Maritime markets, and strengthens our expertise in the mining, construction, power systems and forestry sectors. We are focused on ensuring a seamless transition for our customers and employees."
"For more than 65 years, the Hewitt Group has been at the centre of the resource and construction industries in Quebec and the Maritimes, helping to get roads, dams and mines built and running," said Jim Hewitt, Chairman and CEO of Hewitt Equipment. "With the trend towards consolidation taking root in each of the sectors in which Hewitt operates, we are confident that our customers and employees will benefit from working within an even larger organization with access to even more resources and capital."
Headquartered in Pointe-Claire, Québec, Hewitt sells, rents and services the full line of Caterpillar and other products through its six operating business entities: Hewitt Equipment, Atlantic Tractors, Location Hewitt/Hewitt Rentals, Hewitt Material Handling, Montréal Hydraulique and SITECH QM. Founded in 1952, Hewitt has 45 branches across Eastern Canada and employs more than 2,000 people. Hewitt is privately held.
In the year ended December 28, 2016, Hewitt generated revenues of over $1.0 billion, operating profit of $66.4 million2 and net earnings of $46.6 million. Toromont advises that Hewitt's historical performance should not be viewed as guidance for future performance.
Upon close of the acquisition, Toromont's Caterpillar dealership will operate 120 branches in Nunavut, Manitoba, Ontario, Québec, New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland & Labrador, giving the company one of the largest sales territories in the Caterpillar dealer network. Toromont expects to maintain existing facilities and under its decentralized business model, regional leadership will continue to run their businesses locally - empowered to make decisions in the best interests of their customers.
Mr. Medhurst added, "The acquisition is the largest in our 56-year history and is only possible because of the strength of our balance sheet and proven track record as a disciplined operator focused on generating steady growth across each of our core markets. We are confident in the opportunities and bright future this transaction will bring to all of our key stakeholders - employees, customers, suppliers, shareholders and the communities we serve. We are very proud of our partnership with Caterpillar and appreciative of this opportunity."
Québec is recognized and appreciated as a distinctive market, however it is not new to Toromont. Toromont's CIMCO refrigeration division has 130 employees in Québec, where it has operated since 1951. Over the past 66 years, it has led in the design, engineering, fabrication, installation and servicing of refrigeration in the broad food distribution network together with community hockey rinks and curling clubs, including such marquee facilities as Montréal's Bell Centre.
