Twin Disc, Inc, a global leader in power transmission technology and equipment for marine and land-based applications has completed the €52.1 million (approximately US$60.8 million), acquisition of Veth Propulsion Holding, B.V. and its wholly-owned subsidiaries (“Veth Propulsion”), a global supplier of main and auxiliary marine propulsion products. The closing price included net cash and working capital adjustments.

The acquisition of Veth Propulsion establishes Twin Disc as a leading power control business for the global marine industry and expands Twin Disc’s presence in the market by adding complementary products and powerful new technologies.  In addition, Veth Propulsion enhances Twin Disc’s engineering talent and product development capabilities.

For over 65 years, Veth Propulsion has provided the global marine industry with innovative and leading propulsion and power control products and associated services.

Headquartered in Papendrecht, Netherlands Veth Propulsion is a customer-oriented manufacturer of azimuth rudder propellers, thrusters and generator sets, and is a supplier and repairer of diesel engines.  In December 2015, Veth Propulsion selected Twin Disc as its distributor for select Asian markets.  This unique relationship expanded with a North American distribution partnership in 2016.

“As we celebrate our 100th anniversary, I am excited to announce the accretive acquisition of Veth Propulsion,” said John H. Batten, President and CEO of Twin Disc. “Twin Disc has worked with Veth Propulsion for over two years and the companies share similar cultures based on providing customers with high-quality products and leading design, engineering, and manufacturing services.

“Veth Propulsion strategically expands our global market opportunity, increases our size, scale, and scope within the marine industry, and diversifies our end-market penetration. This is part of our continual strategy to diversify our geographies, markets, and products.”

Strategic Fit of Veth Propulsion with Twin Disc:

• Broad and complementary product portfolio provides added value to new and existing customers
• Further globalizes Twin Disc’s engineering talent and creates opportunities for faster marine and propulsion product development, including hybrid technologies
• Reduces Twin Disc’s dependence on oil and gas, with new technology and sales outside of this market • Creates significant synergy opportunities through increased global sales, service and after-sales support of up to $2 million in operating income on an annual basis by fiscal year 2021
• Produces compelling value creation opportunity, with strong earnings accretion and continued balance sheet flexibility

“Veth Propulsion has extensive experience in engineering and product development that will enhance our current product portfolio,” continued Batten.  “Innovations like Veth Propulsion’s industryrecognized Hybrid Drive and Integrated L-Drive will open new markets and opportunities for growth for Twin Disc.”

“The market for azimuth thruster systems is well established,” said Erik Veth, General Manager.  “This partnership provides Veth Propulsion with the opportunity for increased growth with world-class service and support in a truly global market. The Veth Propulsion management team views Twin Disc as the perfect acquirer of Veth Propulsion, and we believe that Veth Propulsion’s growth and success will be enhanced under Twin Disc’s ownership.”

For calendar 2018, Veth Propulsion is expected to achieve sales of US$60 million (€51 million). The acquisition is expected to be accretive to Twin Disc’s U.S. GAAP earnings by the second year of ownership, in fiscal year ended 30 June 2020.

As part of the acquisition, Twin Disc expects to close a new US$50 million asset-based line of credit and $35 million term note.

www.vethpropulsion.com

www.twindisc.com