Big US dealers are finding Australia simply irresistible and are coming to our paddocks with full force with the latest take-over engulfing the biggest Case IH dealership
With a target of $100 billion in farmgate produce per annum by 2030 our local agricultural industry is on an expansion course and US dealership giants are all jostling for a position.
And while John Deere has been the favoured dealership take-over badge up until now, the old stalwarts running dealer yards with that marque know they can hold out for a top dollar, so maybe it shouldn’t have been a surprise to see Case IH dealers turned into overnight multi-millionaires instead.
And that’s exactly what has happened, US-based Case IH mega dealer Titan Machinery has claimed a toe-hold in our local market in a buy-out worth an estimated Au$100 million to O’Connors shareholders.
Titan Machinery Inc is a mammoth US dealer specialising in Case IH models. The company has built a leading network of full-service agricultural and construction equipment dealer yards throughout the United States with over 90 locations and another 35 locations across Europe.
And while the pickings in Australia for Case IH dealerships begin to get stretched and rare past three yards under the one dealership group, that’s not the situation with O’Connors as they have built up their network to be the biggest by far with 16 dealerships across NSW, Victoria and South Australia.
The offer to O’Connors for a share purchase from Titan Machinery was simply too irresistible to refuse and even if it means trading under the Titan name moving forward, the cash consideration will make that all the more palatable.
If everything progresses as planned, Titan will bolster its worldwide dealer yard count and local customers will be walking into Titan branded yards before the end of 2023.
Titan cash reserves
For those wondering just how far Titan Machinery might slice into the local market, take on board the deep pockets this company has in its reserve.
The company is one of the largest US dealerships in agriculture and construction and is publicly traded on NASDAQ under the symbol TITN, look it up.
And since being founded in 1980 it is still under the same management, with David J Meyer as CEO. And as far as employee power, there were 2,739 recorded in their latest stock exchange report.
If you wanted to make a bid to buy the company, it would set you back US$650 (Au$1015 billion) less the assumed US$300 million (Au$469 million) debt they carry. However, they are not selling, but buying and this is a company prepared to borrow to increase Market share.
As for earnings, the most recent three months of trading reported up until 31 July 2023, revenue of US$643 million (Au$1.004 billion) was gathered from all operations worldwide. This represented an increase of 29.4% when compared to the same 3 months last year.
With upside to all sectors, Titan Machinery is on a roll and once expenses were deducted the company still had US$133 (Au$208 million) to take to the bank from just 3 months of trading results.
And while the company has its fingers in a few pies, agricultural revenues rose by 34.4%, driven mainly by recent acquisitions, while their construction sales also rose, but only by 18.4%.
What does get interesting is how the international division of the company fared. Sales revenue for the three months to 31 July 2023 was US$91 million (Au$142 million), up from US$78 million (Au$122 million) a year ago.
And this is where Titan Machinery sees expansion leading to substantial sales growth.
When announcing the company had inked a deal to acquire O’Connors — which Titan described as Australia’s leading Case IH dealership group with a record of delivering strong financial performance through a combination of organic and acquisitive growth.
With this acquisition, Titan Machinery made it clear it intends to build its presence in Southeastern Australia and capitalise on operational synergies across its global footprint.
O’Connors has always been a pin-up dealer for Case IH, running a very successful operation from the outset since the then family-owned business began in Birchip in northwest Victoria in 1964. It started with JJ O’Connor purchasing an International Harvester dealership.
It has been the phenomenal growth over the past three years from spirited expansion that saw significant growth to position O’Connors with 16 Yards across NSW, Victoria and South Australia. See the background behind the growth here.
The O’Connors legacy will end its days with dealer yards in Ballarat, Birchip, Bordertown, Condobolin, Corowa, Echuca, Forbes, Grenfell, Horsham, Mildura, Ouyen, Shepparton, Swan Hill, Warracknabeal, St Arnaud and West Wyalong.
With the 16 O’Connors dealerships hanging from its belt, it is expected Titan will take a crack at adding further states to its list, with the advantage of being the first giant US dealer to accumulate CNH yards here.
O’Connors Chief Executive Officer, Gareth Webb made the announcement overnight and said the Titan Machinery share purchase offer will continue to reinforce the company’s commitment to providing the best sales and support for customers across the network.
“Joining the Titan Group will further enhance the customer benefits that come with an expansive network, particularly in the areas of parts availability and technical support as well as product expertise and availability.
“Our customers and staff will have access to knowledge and support from the world’s largest Case IH dealer, bolstering the support already offered,” Gareth added.
“The current O’Connors management team and employees will remain the same. It will be business as usual in our day-to-day operations and customers will remain our number one priority.
“We will continue to provide the high-quality sales and service support you’ve come to expect from your local O’Connors dealer,” Gareth concluded.
David Meyer Titan Machinery Inc Chairman and Chief Executive Officer weighed in, “We are very impressed with the O’Connors senior management team, led by CEO Gareth Webb, who has been operating the business exceptionally well over the last five years after succeeding the retiring major shareholders Dennis and Mark O’Connor.
“It’s the strong O’ Connors team, along with their great track record of retailing and supporting the high-power Case IH product line that makes this a very compelling acquisition.
“O’Connors has established itself as a respected leader in the region, earning a reputation for its deep expertise and employee and customer-centric focus,” David Meyer added.
Aaron Bett, General Manager of Case IH Australia/New Zealand, welcomed the announcement and congratulated the professionalism of the O’Connors Executive team on securing such a significant development.
“O’Connors has a rich history in Australian agriculture and has built a significant business with an emphasis on the highest level of customer service and support.
“I’d like to recognise Mark and Dennis O’Connor who have continued to grow the dealer group into a robust and dynamic network that has attracted Titan Machinery to recognise the enormous opportunities in the Australian agriculture market,” Aaron concluded.
About Titan Machinery
Titan Machinery Inc is a major dealer force in the US, founded in 1980 and headquartered in West Fargo ND the company owns and operates a network of full-service agricultural and construction equipment dealer locations in North America and Europe.
Titan Machinery is already the largest CNHi dealership worldwide, with 90 dealerships in North America and an additional 35 dealerships in Bulgaria, Romania, Ukraine, and Germany. Sales emphasis is on CNHi brands Case IH and Case Construction.
The company will now bring its more than four decades of experience and knowledge to our local market. Along with a plethora of models for construction and forestry.