Racine-based Twin Disc Inc. plans to acquire Veth Propulsion, a Dutch firm specializing in marine propulsion and power control products, for approximately $58.6 million.
The transaction is expected to close in July.
"This is a culmination of a really an up to five year process of identifying where our marine markets were going, the technology and the products we were going to need in the future," said John Batten, Twin Disc president and chief executive officer.
Batten said Twin Disc, which makes power transmission equipment for marine and land-based applications, identified Veth as a potential partner five years ago, but a downturn in the oil and gas markets prevented an acquisition from coming together. Veth ultimately selected Twin Disc in 2015 as a distributor for Asian markets and in 2016 for North America, allowing the two companies to begin working together.
“Twin Disc has worked with Veth Propulsion for over two years and the companies share similar cultures based on providing customers with high-quality products and leading design, engineering, and manufacturing services,” Batten said. “Veth Propulsion strategically expands our global market opportunity, increases our size, scale, and scope within the marine industry, and diversifies our end-market penetration. This is part of our continual strategy to diversify our geographies, markets, and products.”
Veth is expected to generate about $60 million in sales this year. Twin Disc reported $168.2 million in sales during fiscal 2017, but had nearly eclipsed that total through three quarters this year as revenue increased 46 percent with a rebound in oil and gas markets.
Adding Veth would make marine and propulsion systems about 62 percent of Twin Disc’s business, up from 52 percent. The deal will also diversify Twin Disc’s geographic mix, increasing European sales from 20 percent to 35 percent of the total.
“We feel we have a very excellent chance of growing their business and growing our,” Batten said.