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WEST FARGO, N.D. — Titan Machinery Inc., a leading network of full-service agricultural and construction equipment stores, announced today that it has entered into a definitive purchase agreement to acquire J.J. O’Connor & Sons Pty. Ltd. (“O’Connors”), the largest Case IH dealership group in Australia, for $63 million in cash, subject to final working capital and other closing adjustments (the “Transaction”). In the unaudited full fiscal year period ended June 30, 2023, O’Connors generated revenue of $258 million and EBITDA of $21.4 million, as translated to USD.
O’Connors, founded in 1964, is the largest Case IH dealership group in Australia, and a market leader in high horsepower equipment. O’Connors delivers a wide range of new and used equipment, parts, and services through its 15 dealerships and 1 parts location located in the Australian southeastern grain belt, which includes the regions of Victoria, New South Wales, and South Australia. In addition, O’Connors is a distributor for more than 25 leading short-line equipment brands, providing an impressive range of complementary offerings to its core Case IH line of products, and has a strong parts and service business that provides a reliable recurring revenue stream. On a consolidated basis, O’Connors achieved a gross margin of approximately 18.7% in the full fiscal year 2023, and generated a total pre-tax margin of approximately 7.2%, representing a margin profile that is consistent with Titan’s.
David Meyer, Titan Machinery’s Chairman and Chief Executive Officer, stated, “We are pleased to announce our definitive agreement to acquire O’Connors, Australia’s leading Case IH dealership group. This transaction marks our entry into the Australian agriculture market, as we continue to seek opportunities for Titan to expand its reach, both domestically and abroad. O’Connors’ operating metrics, core values, and customer-centric focus align with our own, making them a great partner for our entry into the Australian agriculture market, which is benefiting from strong fundamentals that are being driven by enhanced productivity, economies of scale, and farmer profitability.”
Meyer continued, “We are very impressed with the O’Connors senior management team, led by CEO Gareth Webb, who have been operating the business exceptionally well over the last five years after succeeding the retiring major shareholders Dennis and Mark O’Connor. It’s this strong management team, along with their great track record of retailing and supporting the high horsepower CaseIH product line up that makes this a very compelling acquisition. O’Connors has established itself as a respected leader in the region, earning a reputation for its deep expertise and employee and customer-centric focus. Their long-term business relationships, built over nearly six decades, demonstrates their commitment to excellence. The O’Connors team has a proven track record of driving organic growth, M&A execution, and profitability, and we believe that there is additional opportunity to build upon their growth formula and capitalize on operational synergies across Titan’s global footprint as we integrate the business.”
Strategic & Financial Highlights
The definitive agreement to acquire O’Connors contemplates an acquisition price of $63 million, subject to final working capital and other closing adjustments, and will be funded with cash and Titan’s existing credit facility.
The O’Connors organization is represented by a strong, capable and professional leadership team that spearheaded its growth acceleration over the past five years. It is anticipated that Titan Machinery will retain O’Connors’ management team following the integration, who will be responsible for the region’s operating performance and report into Titan’s executive team.
The Transaction is subject to customary closing conditions and is expected to close in the fourth quarter of calendar 2023.
Upon closing, the Company expects to add a fourth reporting segment to reflect the acquired Australian business and is providing incremental expectations for that segment for the balance of fiscal 2024. The table below assumes no changes to the Company’s outlook or underlying assumptions beyond the expected accretion from the Transaction in fiscal 2024. The Company will provide any further updates to its consolidated guidance when it releases financial results for the fiscal second quarter ended July 31, 2023, tomorrow, Thursday, August 31, 2023.
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