Terex Corp. is more likely to be a buyer than an acquisition target because of the cash pile the crane and excavator maker has amassed, Gimme Credit LLC said.
“While this cash hoard has stirred speculation that Terex is a potential takeover candidate itself, we think it is more likely that the company will make a sizeable acquisition,” Vicki Bryan, an analyst for Gimme Credit in New York, said in a report today. She raised her rating for Westport, Connecticut-based Terex to “outperform” from “underperform.”
Terex said Feb. 9 it had $1.4 billion of liquidity at the end of 2010, comprised of $894.2 million in cash and a $503.4 million credit facility. It got $1 billion in cash and 5.8 million Bucyrus International Inc. shares last year from selling its mining unit to Bucyrus. Terex’s Bucyrus stock is valued at $528 million after Caterpillar Inc. agreed in November to buy Bucyrus for $92 a share in a deal which is due to close in mid-2011, Bryan said.
Terex Chief Executive Officer Ron DeFeo, speaking on a Feb. 10 conference call, said he hadn’t found a suitable asset for acquisition at the “right” price after market valuations rose.
“We’ve got a number of things that we’re looking at and considering,” he said.
Terex climbed 94 cents, or 2.6 percent, to $37.50 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have risen 21 percent this year.