Ag Informer – Titan Machinery & Heartland Ag look to Merge

Source: Titan Machinery news release

WEST FARGO, N.D.– Titan Machinery Inc. (Nasdaq: TITN), a leading network of full-service agricultural and construction equipment stores, announced today that it has entered into definitive purchase agreements to acquire Heartland Ag Systems, Heartland Solutions and related affiliates (“Heartland”), the largest Case IH Application Equipment distributorship in North America providing application-focused solutions for commercial applicators, for an aggregate $110 million, subject to final working capital and other closing adjustments (the “Transaction”).

The Transaction consideration will be comprised predominantly of balance sheet cash. In the full year period ended December 31, 2021, Heartland generated revenue of $213.9 million and EBITDA of $15.3 million.

Heartland Ag Systems traces its roots to 1966 and is the largest Case IH Application Equipment distributorship in North America and one of the leading national distributors for sprayer parts and accessories. Heartland has exclusive distribution agreements across 17 midwestern and northwestern states, supported by 12 retail stores, six of which are within Titan Machinery’s existing Agriculture footprint, as well as Agriculture and related commercial application equipment manufacturing at their Hutchinson, MN headquarters.

Heartland is well diversified with a strong parts & 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 Machinery’s existing business.

David Meyer, Titan Machinery’s Chairman and Chief Executive Officer, stated, “We are proud to announce our definitive agreement to acquire Heartland Ag Systems today. This transaction is significant for Titan Machinery both in size and strategic fit. 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.

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.”

Mr. Meyer added, “Titan Machinery is uniquely able to integrate these two industry leading businesses, creating a complete distribution model of this scale – covering both the farmer and commercial applicator – with our expansive footprint across the Upper Midwest region, high-level of customer service, and commitment to operating excellence.

“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. 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.”

Strategic and Financial Highlights

Expanded market opportunity through access to commercial application market – Strategically provides Titan Machinery access to the Case IH full-line of application equipment product line (i.e.: self-propelled sprayers, fertilizer applicators), enhancing competitiveness with the commercial application customer.

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