Volvo AB, Europe's second-biggest truckmaker, agreed to buy the road-development unit of Ingersoll-Rand Co. for $1.3 billion in cash in an effort to capture part of the growing market for construction equipment.
The division, which makes heavy equipment for building roads, reported revenue of $864 million last year, Gothenburg, Sweden-based Volvo AB said in a statement on Waymaker newswire today. The companies expect to complete the transaction in the Q2. Worldwide highway construction is worth $4 billion and will expand „significantly” as countries upgrade infrastructure in coming years, Volvo said.
Sharing of the Volvo and Ingersoll Rand Co. units' sales and distribution networks will probably result in annual savings of 600 million kronor ($85 million) within five years, the company said. The Ingersoll Rand division, based in Shippensburg, Pennsylvania, employs 2,100 employees.
Last year's operating income reached $101 million. The operations have manufacturing units in the US, Germany, India and China. Volvo will gain material-handling operations, dealerships in North America as well as distribution networks in Europe from the transaction, the company said. (Bloomberg)