GLOBE NEWSWIRE
The GEFCO businesses contributed approximately $50 million in annualized revenue and the divestiture is expected to eliminate related annual operating losses .
Highlights:
- Accelerates Business Transformation and Aligns with Strategy to Simplify the Organization
- Increases Focus on Core Higher Margin Businesses
- Further Strengthens Financial Flexibility to Invest in Growth Opportunities
Astec Industries, Inc. (Nasdaq: ASTE) announced today that it intends to sell its GEFCO, Inc. subsidiary, located in Enid, Oklahoma. GEFCO produces drilling equipment for water wells, geothermal wells, and cathodic protection; high-pressure double pumpers for energy services; and King Oil Tools for oil & gas and other applications. The GEFCO businesses contributed approximately $50 million in annualized revenue and the divestiture is expected to eliminate related annual operating losses and be accretive to annualized EPS. The divestiture process is in early stages and management expects to conclude the transaction by the end of June 2020.
“As part of a thorough strategic review of our product portfolio, we determined that divestiture of GEFCO enhances shareholder value and aligns with our vision for the future of Astec Industries,” stated Barry Ruffalo, CEO of Astec Industries, Inc. “We are in the process of finding a buyer for GEFCO’s businesses. The transaction will further our strategy to simplify the organization, strengthen our financial position and release additional capital to deploy toward future growth opportunities. While the transaction is expected to enhance shareholder value, we remain mindful of the approximately 150 GEFCO employees that may be affected by the divestiture.”
Vince Trotta, President of GEFCO stated, “We would like to thank our employees for their dedication over the years and want to provide as much advanced notice as possible. We have enjoyed our relationship with Astec Industries and look forward to the possibility of becoming part of an organization that more broadly participates and invests in the markets we serve. We hope such a buyer would retain our employees for its operations. In the event that is not the case, we will assist with job searches, unemployment registration, and other benefits.”
Use of Proceeds
The proceeds of the transaction will be invested in future growth opportunities aligned with our disciplined capital allocation process. The company will provide further details about its capital allocation strategy with fourth quarter and full-year 2019 results in late-February 2020.
Aztec Industries family of subsidiaries.
