Toro To Acquire Snowplow Manufacturer Boss For $227M
The Toro Company announced late Monday that it would acquire Boss, a manufacturer of snow and ice management equipment based in Iron Mountain, Michigan.
The $227 million purchase by the Bloomington-based lawn care equipment manufacturer is aimed at strengthening sales to professional contractors and providing a portfolio of products that are “counter-seasonal” to Toro’s lineup.
“With the addition of Boss to our existing market-leading professional contractor business, we are even better positioned to strengthen and grow our relationships with these important customers,” Toro CEO Michael Hoffman said in a statement.
Toro currently makes snow removal products for the residential market, but they comprised only about 3 percent of overall sales during fiscal 2013.
During a call with investors, Hoffman said the two companies share many of the same clients: contractors, municipalities and acreage owners. Two-thirds of northern-climate contractors who maintain commercial and residential properties during warmer months also perform snow removal services in the winter, so many of Toro’s current customers could be sold on the Boss brand.
The company said it has been eyeing acquisitions in the snow and ice management field for some time and hinted it had talked with Boss in the past. “In this case, we had a relationship and the owner was willing to sell,” Hoffman said.
Boss will remain its own distinct brand and there are no expected changes in leadership or the location of its manufacturing facilities. Instead, the acquisition is viewed as a growth opportunity for both brands.
“This is an exciting milestone in the history of Boss,” Boss president Dave Brule said in a statement. “As part of Toro, Boss will be poised to experience additional growth and market leadership within the snow and ice management industry.”
Boss is second in market share, with more than 20 percent of the industry and it expects 2014 revenues of $125 million. Hoffman told investors that they plan to expand the Boss brand—with an existing regional and national presence—to the international stage.
The purchase will be funded primarily through on-hand cash and unsecured revolving credit, but $30 million will come from a three-year promissory note from Toro.
The deal is expected to close during Toro’s first quarter of fiscal 2015, which starts Nov. 1.
Last year, the company acquired a Chinese “micro-irrigation” company.
By midday Tuesday, the Toro stocks were up slightly to $60.45 per share.