Toro Co. (TTC) is getting into the ditch-digging business.
The lawnmower and machinery manufacturer on Friday announced that it has agreed to acquire privately held Charles Machine Works Inc., the parent company of Ditch Witch and several other leading brands in the underground construction market, for $700 million in cash.
The deal, which is subject to regulatory approval, is expected to close before the end of Toro's fiscal 2019 third quarter, the company said in a statement.
Toro CEO Richard Olson said the agreement will help Toro delve further into the infrastructure space, where "... potential for growth in addressing both aging infrastructure that is currently in place and new infrastructure that will be needed to support next generation technologies like 5G" will provide future opportunities.
Excited to announce that The Toro Company has entered into an agreement to acquire Charles Machine Works, with businesses that include Ditch Witch and other leading brands in the underground construction market. https://t.co/gHf4qHPORq pic.twitter.com/1vDuQy26z5— Toro (@TheToroCompany) February 15, 2019
Toro plans to finance the transaction with a combination of cash on hand and debt, including from additional financing arrangements and borrowings under its existing credit facility. The purchase price represents a multiple of approximately eight times Charles Machine Works' calendar year 2018 EBITA.
Toro shares were up 1.5% to $63.10 in trading on the New York Stock Exchange.
Toro makes specialty equipment used for outdoor and turf maintenance, snow and ice management, landscaping, and irrigation. Charles Machine Works makes equipment for underground construction and service, including its trademarked Ditch Witch, HammerHead, American Augers, Trencor and MTI equipment.