Toyota Industries Corp (TICO) and Cascade Corp say they have entered into a definitive agreement under which TICO would acquire Cascade for USD759 million.
Through a tender offer probably starting on 5 November, TICO of Kariya plans to purchase 100% of the shares of Cascade for USD65 each. That represents a 23% premium over Cascade's volume-weighted average share price for the 60 days ended 19 October.
TICO and Cascade boards of directors have unanimously approved the transaction, which is projected for completion by 31 December.
On 22 October, Cascade and TICO issued a joint press release, and Cascade sent letters of explanation to Cascade employees and customers and issued an employee-oriented set of questions and answers.
Under terms of the agreement, TICO plans to operate Cascade under its existing name as a wholly owned Fairview-based subsidiary.
Cascade will exist separately from TICO's extensive Toyota Material Handling operations, which "will not receive any competitive preference or advantage as a result of our new ownership", Cascade says in the Q&A explanation to employees. "We certainly hope that Toyota Lift Trucks will remain a highly valued customer in the future as they are today."
Cascade makes materials handling load engagement products that are widely used on forklift trucks and, to a lesser extent, on construction and agricultural vehicles.
Robert C Warren Jr, Cascade president and CEO, says, "Our company has concluded that the offer being made by Toyota Industries Corp, one of the world's most admired companies, represents an ideal combination of attractive return to our shareholders, continuing service to our customers and stability and opportunity for our employees."
Tetsuro Toyoda, TICO president and representative director, says, "Cascade Corp has a strong reputation for providing customers with the latest technology in materials handling attachments for lift trucks. . . . We've long known Cascade as a reliable and world-class supplier to our materials handling business, and we look forward to better meeting our customers' logistical needs by broadening our lift truck business."
Cascade's executive team will remain in place. Warren and Richard S Anderson will lead the transition in conjunction with the entire executive management team. Anderson is Cascade senior vice president and chief operating officer.
"Both Andy and I are passionate about the success of our company, and our commitment to you, our business and our employees remains unchanged," Warren tells customers.
Cascade was organised in 1943 under the laws of the state of Oregon, and its shares trade on the New York Stock Exchange (NYSE).
Cascade has numerous global and regional competitors including publicly traded Bolzoni SpA of Casoni di Podenzano, Italy, which, as the Bolzoni Auramo Group reported 2011 consolidated turnover of EUR115.8 million (USD150 million). By comparison, Cascade reported profit of USD63.0 million on sales of USD535.8 million for the fiscal year ended 31 January.
Cascade also competes in varying degrees with some of its forklift-manufacturing customers that make a portion of their load engagement product requirements. Cascade says its five largest customers comprise approximately 25% of the company's consolidated net sales.
In addition to the Fairview headquarters, Cascade's primary manufacturing, distribution and sales operations occupy eight locations in North America, six in Europe, six in the Asia Pacific, four in China and one in South America.
As of 31 January, Cascade had approximately 1,900 full-time employees.
As of 5 March, Warren Holdings LLC owned 1,465,866 shares, or 13.2%, of Cascade stock. CEO Warren and his sister, Wendy Warren, manage the limited liability company and share voting and investment power. The Warrens and the LLC "have entered into agreements with TICO to support the transaction and to tender their shares in the tender offer", the press release says.
Other major owners of Cascade stock include investment firms T. Rowe Price Associates Inc of Baltimore, Maryland, 9.6%; Michael W Cook Asset Management Inc of Memphis, Tennessee, 7.3%; and Blackrock Inc of New York, 6.2%.
For the fiscal year ended 31 March, TICO reports materials handling equipment accounted for 37% of consolidated sales of JPY1,543 billion (USD18.7 billion). Automotive compact-to-midsize vehicles, car air-conditioning compressors and automotive engines represented 52% of TICO sales. TICO says it employs more than 43,000 staff.
TICO's common stock is listed on the Tokyo Stock Exchange. The separate unaffiliated entity, Toyota Motor Corp of Toyota City, Japan, trades on the NYSE.
Among its major consolidated subsidiaries, TICO lists 31 in Japan and 58 elsewhere.
Among those outside Japan are Toyota materials handling manufacturing, distribution and dealership subsidiaries in North America, South America, Europe and the Asia-Oceania region. In addition to the numerous materials handling units carrying the Toyota brand, TICO subsidiaries include BT Products, Raymond Corp and Cesab Carrelli Elevatori SpA.
When the tender offer begins, TICO will use a new wholly owned subsidiary known as Industrial Components and Attachments II Inc for its Cascade-related filing with the US Securities and Exchange Commission. The tender offer statement will be mailed to Cascade shareholders.
In connection with the transaction, Nomura Securities is TICO's financial advisor, and White & Case LLP is TICO's legal advisor. BofA Merrill Lynch is Cascade's financial advisor, and Miller Nash LLP is Cascade's legal advisor.