22.07.2022

Mills enters earthmoving sector

Brazilian aerial lift rental company Mills has agreed the acquisition of earthmoving rental business Triengel Locadora (Triengel Locações e Serviços) in an all share purchase deal.

The transaction value of the deal is reportedly R133.7 million ($26.2 million) made up of R62 million ($12.2 million) in cash, plus a further R10 million ($2 million) over five years, and Mills’ shares worth R18 million ($3.5 million), while assuming net debt of R43.7 million ($8.6 million). Mills is also earmarking R225 million ($44.1 million) of capital expenditure on expanding the ‘yellow line’ fleet.

The Triengel business operates from two locations in São Paulo state and was formed in 2019 through the merger of two earthmoving rental businesses - Triex Locação de Serviços Portuários which focused on the sugar cane/Agricultural and port markets and Hengel Locações e Serviços which was more focused on the industrial sector.

The company runs a fleet of 245 “premium branded machines” including wheel loaders, loader backhoes and excavators – many of them CAT machines, with an average age of two years. Mills has also committed to purchase 30 machines from Hengel and 46 units from Triex along with their respective rental contracts and will take on the debt on 27 new stock machines amounting to R25 million ($4.9 million).

Chief executive Sergio Kariya said: “We believe that Triengel will add enormous expertise to Mills as it retains top executives who have more than 20 years of experience in the sector. Additionally, Triengel has maintenance systems which are customized for its product line that will allow the business to rapidly scale. The Transaction is in line with the Company's growth and diversification strategy through the efficient allocation of capital and consolidating its position in the machinery and equipment rental market with its competitive advantages.”

Update
The transaction was completed and closed on September 13th.

Vertikal Comment

This appears a curious move, although one has to assume that Mills believes that the earthmoving rental market is poorly served and presents opportunities. If this is the case, one wonders why the owners of Triengel is exiting the business.