Deal making: Navistar & MAN to collaborate; Terex buys Reedrill; S&S sells TUG; Cat buys Chinese OEM; General Dynamics propulsion sold

Diesel Progress North American Edition, Jan, 2005

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Navistar International Corp. and MAN Nutzfahrzeuge AG, Munich, Germany, announced a strategic agreement to collaborate for the design, development, sourcing and manufacturing of components and systems for commercial trucks, including a range of diesel engines. Daniel C. Ustian, Navistar chairman, president and CEO said, "this agreement is one of a number of opportunities we are exploring for strategic growth in order to achieve long-term success and to meet our goal of reaching $15 billion in revenues and commensurate returns by the end of the current business cycle."

Jack Allen, president of International Engine Group, said both companies

have agreed to not comment on any specific components or applications at this time for competitive reasons. "We have a strategic collaboration agreement with MAN and we are exploring a number of opportunities to expand our International engine product line and to offer the value of integrated products for our customers," Allen said.

Metso Corp. has signed an agreement to sell its Reedrill rock drilling equipment business to Terex Corp., following relevant regulatory approvals. Reedrill manufactures and sells surface and underground drilling equipment, drilling tools and parts for mining and construction industries and drilling contractors. Reedrill's main facility is in Sherman, Tex. The company had 2003 net sales of about $80 million and it employed some 240 people.

Stewart & Stevenson Services Inc. announced an agreement to sell its Airline Products business to Jacobson Partners, a New York private equity firm. The consideration for the acquired assets will be $60 million in cash, certain deferred consideration and the assumption of specified liabilities. The sale is expected to close in January subject to receipt of required regulatory approvals and other customary conditions to closing. Stewart & Stevenson TUG, Marietta, Ga., manufactures aviation ground support equipment.

Caterpillar Inc. has announced the signing of a definitive agreement to acquire Shandong SEM Machinery Co. Ltd. (SEM), one of China's major wheel loader manufacturers. Cat said the acquisition is the latest step in a multi-year strategy to expand its presence in China. Caterpillar will purchase a minority interest in SEM, with options to purchase the remaining equity after two years.

L-3 Communications, New York City, said that it has agreed to acquire the Propulsion Systems business unit of General Dynamics for $185 million in cash. The acquisition is expected to be completed in the first quarter of 2005. Propulsion Systems, Muskegon, Mich., produces engines, transmissions, suspensions and turret drive systems for combat vehicles, including both tracked and wheeled vehicles, L-3 Communications is a provider of intelligence, surveillance and reconnaissance systems, secure communications systems and aircraft modernization.

Fiat SpA said its Iveco SpA trucks unit has signed a framework agreement to develop a long-term partnership with China's Shanghai Automotive Industry Corp. The partnership with one of the largest Chinese automakers will focus on building trucks and other industrial vehicles, a Fiat spokesman said. Fiat did not indicate the expected value of the agreement with Shanghai Automotive nor any particular projects.

Cummins Inc. has signed a joint venture contract agreement with Dongfeng Cummins Engine Co. Ltd. (DCEC), a step toward establishing its first technical center in China. The new tech center is expected to open in the first quarter of 2006 in Wuhan, China, and will provide engineering and technical services for the full range of Cummins products built in China, including diesel and natural gas engines, power generation systems, turbochargers and filtration products.

Parker Hannifin Corp. has acquired Advanced Products Co., a privately held manufacturer of metallic and polymer spring energized seals, for an undisclosed cash sum. With operations in North Haven, Conn., and Boom, Belgium, Advanced Products employs 150 people worldwide and has annual sales of about $20 million. Parker said it will integrate Advanced Products with the company's seal group.

Horton Holding Inc., Roseville, Minn., has purchased Engineered Cooling Systems Inc. (ECS), Carmel, Ind. ECS produces fans for heavy- and medium-duty trucks, off-highway equipment, buses, motor coaches, passenger vehicles and industrial applications. ECS will be renamed Horton Fan Systems and will be headed by Vice President and General Manager Tom Nelson.