Titan Machinery Inc., the Fargo, N.D.-based network of full-service agricultural and construction equipment stores, announced on July 11 that it has entered into definitive purchase agreements to acquire Heartland Ag Systems, Heartland Solutions, and related affiliates, the largest Case IH application equipment distributorship in North America.
The purchase price was reported at approximately $110 million, subject to final working capital and other closing adjustments, with the amount comprised primarily of cash from the company’s balance sheet. The transaction is expected to close in August 2022, subject to customary closing conditions, with all of Heartland’s 340 employees joining Titan. Heartland’s management team is also expected to remain in place throughout and following the integration.
“This transaction is significant for Titan Machinery both in size and strategic fit,” said David Meyer, Titan Machinery’s Chairman and CEO. “Most importantly, this gives Titan Machinery access to the full product line of Case IH application equipment, including self-propelled sprayers and fertilizer applicators, along with incremental sales opportunities to package with tractors, tillage, and construction equipment to the commercial application customer.”
Founded in 1966, Heartland Ag Systems has exclusive distribution agreements across 17 states in the Midwest and Northwest regions, supported by 12 retail stores, six of which are within Titan’s existing footprint. The company also operates a commercial application equipment manufacturing facility at its Hutchinson, Minn., headquarters. In the full year period ended Dec. 31, 2021, Heartland generated revenue of $213.9 million and EBITDA of $15.3 million.
Titan said Heartland is well diversified, with a strong parts and service business that represents approximately 30% of full-year 2021 revenues and generated pre-tax margins of 4.2%, presenting a similar profile to that of Titan’s existing business. The transaction will equate to approximately $274 million in revenue, $0.43 in diluted earnings per share, and $19.5 million in EBITDA, Titan said.
“The increased parts, service, and technical capabilities we bring to the commercial application customers in our highly productive core Agriculture footprint, combined with the long-term business relationships Heartland has developed with the commercial application customers, will be a win/win for Titan Machinery, Heartland, Case IH, and the hundreds of commercial application providers in our core markets,” Meyer said.
“We see immediate revenue synergies to be captured in the first full year of operation, and we expect to generate additional growth and margin expansion as we enhance our combined network,” Meyer added. “We are excited to add Heartland’s experienced leadership team and look forward to a bright future together as we welcome the entire Heartland organization to the Titan Machinery family.”