07/20/2021
Manitowoc acquires the crane business of Louisiana-based equipment dealer and rental company H&E Equipment Services.
Manitowoc will pay approximately $ 130 million for the company, funded by a combination of cash and the manufacturer’s existing debt. The transaction is expected to close in the fourth quarter, subject to customary closing conditions and regulatory approvals.
The acquisition of H & E’s crane business includes crane rental and is intended to expand Manitowoc’s ability to provide rental equipment and to directly handle sales and support of its products. H & E’s crane business operates in 11 full-service branches.
CEO Aaron Ravenscroft said, “Over the past few quarters we have announced that we will grow through four strategic priorities, including acquisitions with a focus on the aftermarket. The purchase of H & E’s crane business is the next step on our way to growing the less cyclical part of our business. H&E has a long history and excellent reputation for the lifting industry and we look forward to welcoming the H&E crane team to Manitowoc. ”
Brad Barber, Chief Executive of H&E added, “H&E has grown into one of the largest rental equipment companies in the US by continuing to grow. The sale of our crane business to Manitowoc marks a transformative event in H & E’s ongoing efforts to strengthen its focus on the equipment rental business while positioning ourselves for future growth opportunities. We believe that Manitowoc will offer our crane employees further career opportunities and will continue to provide first-class service to existing crane customers. “
H&E – originally Head & Engquist – is one of Grove’s longest-serving crane dealers. The relationship with the company dates back to the early 1970s, if not earlier. Since 1998, when it acquired Dallas-based Martin Equipment, the company has also been handling Manitowoc crawler cranes. Head & Engquist was originally a classic crane and excavator distributor – Grove and Komatsu – covering parts of Louisiana including New Orleans and Baton Rouge. In the last 25 years or so it has expanded into other regions, expanded its range of devices and built up its rental fleet. The company made a big step forward in 2007 when it acquired JW Burress, a Grove dealer based in Roanoke, Virginia.
Today, the company operates from 105 locations on the West Coast, Intermountain, Southwest, Gulf Coast, Mid-Atlantic and Southeast, selling and renting a wide range of equipment including cranes, aerial work platforms and telehandlers.
Vertical comment
This is an interesting move, and while the signs were there, somewhat surprising. It brings Manitowoc closer to its end customers and end users while increasing control over its sales and rental chain. It will certainly help smooth out the ups and downs of a traditionally cyclical market. For example, in the past year many manufacturers suffered a drastic drop in sales, including order cancellations, even though their main customers – rental companies – never saw the same decline in volume and recovered quickly. It will allow Manitowoc to smooth the capacity to add equipment to the rental fleet when it’s slow, create good used equipment, and create a buffer stock when demand picks up again.
The strategy follows a growing trend among companies in the ship and loader crane market that have been busy increasing the service area of their business over the past five years, as this area is not only less cyclical but also carries higher margins.
A key factor will be how the company’s national crane rental customers respond and how Manitowoc deals with areas that are at risk of becoming significant competitors. Although the H&E rental business tends to follow the classic AED dealer rental model, which is based on bare leasing and longer-term rental, this is a different market than full-service rental from companies like Maxim or the ALL group etc., some overlap is likely be marginal and lead to less competition than the existing H&E business. Manitowoc is also likely to prove to be a friendlier landlord because of its focus.
Interesting times.
