01:09 PM EDT, 07/22/2024 (MT Newswires) -- Terex ( TEX ) announced plans to buy the environmental solutions business that includes waste and recycling equipment from Dover (DOV) for $2 billion in an all-cash deal.

Adjusted for the present value of expected tax benefits, the purchase price is $1.73 billion, according to Terex ( TEX ). This represents a multiple of about 8.4-times the business' 2024 estimated earnings before interest, taxes, depreciation and amortization, including anticipated synergies, Terex ( TEX ) said.

It expects roughly $25 million of cost and revenue synergies by 2026. Shares of Terex ( TEX ) jumped 9.7% in afternoon trade.

This acquisition marks "an incredibly exciting milestone in our multi-year transformation and aligns with our goal of strengthening our portfolio and leveraging our operating system to drive sustainable, accelerated long-term growth," Terex ( TEX ) Chief Executive Simon Meester said in a statement.

In a separate statement, Dover said the environmental solutions group, or ESG, generated about $750 million in revenue last year. Its products include refuse collection vehicles, compactors, and balers, as well as related aftermarket equipment and digital solutions. Shares of Dover were down 1.7%.

"ESG has been a part of the Dover family for decades and has created significant value for Dover shareholders over this time period," CEO Richard Tobin said.

The addition of ESG expands Terex's ( TEX ) North American addressable market while adding a non-cyclical, financially accretive business to its portfolio. The business has delivered a more than 7% long-term organic revenue compound annual growth rate over the last 10 years, said Terex ( TEX ), a maker of material handling equipment and aerial work platforms.

ESG's EBITDA margin including synergies are expected to add 130 basis points of margin accretion and boost Terex's ( TEX ) EBITDA to about $1 billion on a pro-forma basis. The deal is expected to be accretive by a double-digit percentage to adjusted EPS in 2025. Terex ( TEX ) is scheduled to report second-quarter results for its fiscal 2024 period on July 31.

Terex ( TEX ) said the transaction is expected to close in the second half of 2024, subject to regulatory approval, while Dover is forecasting a close before the end of 2024. Terex ( TEX ) has secured debt financing, which it will use along with cash to fund the purchase.

Price: 61.59, Change: +5.13, Percent Change: +9.09