By Roger Renstrom

In a major deal, Oshkosh Truck Corp plans to buy JLG Industries Inc for about USD3 billion and assume about USD200 million in JLG debt.

The offer, at USD28 a share of JLG common stock, is about 35 per cent higher than the stock's closing price of USD20.75 before the October 16 announcement. The transaction should be completed within 90 days, subject to shareholder and regulatory approvals.

The firms serve different markets. Oshkosh manufactures fire, military, concrete and garbage trucks and truck bodies, and JLG concentrates on telehandlers and aerial work platforms, typically for use in non-residential construction.

Oshkosh CEO Robert Bohn contacted JLG in early August and expressed an interest in combining the businesses.

Oshkosh had followed JLG's progress for several years, hired consultants to study JLG's markets, products and competitors, and lined up the necessary financing before contacting JLG. Bank of America and JPMorgan Chase Bank will supply a USD3.5 billion senior credit facility.

Although JLG was not offered for sale, company officials conveyed the deal to JLG's board of directors. "The independent directors were the primary decision makers," JLG CEO Bill Lasky said. "After a lot of work and due consideration, ultimately the decision was made to proceed with the transaction."

Lasky is optimistic. "I view this merger as a partnership that will benefit both companies. JLG's product line is complementary to Oshkosh's and provides entry into new markets. Oshkosh's purchasing and logistics systems will bring momentum to current JLG initiatives. Both companies will be able to share product technology and best practices."

Growth-minded Oshkosh, based in Oshkosh, employs more than 9,400, has more than 5 million square feet of manufacturing space in North America and Europe and is on target for annual sales of about USD3.4 billion. Oshkosh Truck has completed 14 acquisitions in the past decade.

JLG, based in McConnellsburg, Pennsylvania, employs 4,088, has more than 1.5 million square feet of manufacturing space, also in North America and Europe, and reported annual sales of USD2.29 billion. JLG would become the largest of four Oshkosh business segments and account for an estimated 40 per cent of the combined business.

Shares of both firms trade on the New York Stock Exchange.

"Both companies have leading market positions with significant brand equity, and both offer the opportunity for exceptional and solid financial returns," Lasky said. Oshkosh managers "believe in being in the #1 or #2 market position, like we do; and the majority of their brands hold that #1 or #2 position."

Bohn said: "The acquisition of JLG is the latest broad-based initiative in the continuing transformation of Oshkosh Truck Corp. It is aligned with our historic acquisition strategy as we expand into complementary markets, and will be instrumental in building our global focus and scale that are increasingly needed to continue to be successful."