Astec Industries, Inc. (NASDAQ: ASTE) shares jumped Thursday, after announcing that it has entered into a definitive agreement to sell its road construction equipment business, including the Roadtec and Carlson brands, to Komatsu America Corp., a subsidiary of Komatsu Ltd., for an enterprise value of $75 million, subject to customary closing adjustments.
The Roadtec Business, based in Chattanooga, Tennessee, designs, manufactures and supports equipment used in road construction and resurfacing, including highway-class and commercial-class asphalt pavers, paver screeds, Shuttle Buggy material transfer vehicles and cold planers, as well as related aftermarket parts and rebuild services.
The Roadtec Business, which is reported within Astec’s Infrastructure Solutions segment, generates approximately $145 million in annualized revenue. The divestiture is expected to eliminate associated operating losses and be accretive to Astec’s annualized EPS.
Astec expects to realize approximately $65 million in total expected cash proceeds and tax benefits associated with the sale. The cash proceeds are expected to strengthen Astec’s balance sheet and provide additional financial flexibility to invest in its core businesses and pursue strategic acquisitions, consistent with the Company’s disciplined capital allocation strategy.
ASTE shares hiked $1.24, or 3.3%, to $38.72.
