Astec Industries, Inc. (Nasdaq: ASTE) on Thursday announced that on Wednesday the company entered into agreements to sell its American Augers, Inc. subsidiary as well as certain assets related to the Trencor large trencher product line of Astec Underground, Inc. to The Charles Machine Works, Inc. of Perry, Oklahoma for approximately $55 million in cash, subject to closing adjustments. The Company expects the sale to close before the end of the year. Not included in the sale are the American Augers vertical oil and gas drilling rig product line and the four-track surface miner product line manufactured at Astec Underground.
The vertical oil and gas drill rig product line will be relocated to GEFCO, Inc., a subsidiary of Astec Industries, Inc. located in Enid, Okla. The company will continue to manufacture and expand the surface miner product line at its Astec Underground facility where it will also continue to manufacture its newly developed line of high pressure pump trailers used for fracking and well servicing. The total revenues of the sold business unit and product line were $42 million for the nine months ended Sept. 30.
Commenting on the sale, J. Don Brock, chairman of the board & CEO, said, "We acquired the Trencor operation in 1988 and American Augers in 1999. These businesses have been very cyclical through the years. Our strategy has been to buy and grow companies; however, we sold our utility trencher and drill line to Toro earlier this year, and the opportunity became available to sell American Augers and the Trencor line of large trenchers at Astec Underground. We will continue to manufacture the vertical oil drilling rigs and related equipment by moving that product line to GEFCO. At Astec Underground in Loudon, Tn., we plan to continue to grow our pump trailer business and develop more equipment related to the fracking industry, as well as expand our surface miner product line. These products are a part of our strategy to grow in the energy and mining industries."
The company also announced that Thursday the board of directors declared a special one-time dividend of $1.00 per share to be paid on December 12, 2012 to shareholders of record as of Nov. 20, 2012.
Commenting on the declaration of the dividend, Dr. Brock said, "We have maintained a strong balance sheet for several years but have not found the right acquisitions in which to invest our excess cash. While acquisitions are still a high priority for us, the Board of Directors decided to declare a special one-time dividend as a tangible return of value to our shareholders while the tax rates are still advantageous."
Astec Industries, Inc. is a manufacturer of specialized equipment for building and restoring the world's infrastructure. Astec's manufacturing operations are divided into four primary business segments: aggregate processing and mining equipment; asphalt production equipment; mobile asphalt paving equipment; and underground boring, directional drilling and trenching equipment. Additionally, Astec's Other Group contains one subsidiary that manufactures equipment used for wood processing and recycling and one that is a company-owned dealership located in Australia.