Snorkel / Xtreme Manufacturing LLC
Cavendish is pleased to have acted for The Tanfield Group plc (“Tanfield”) on the recent sale of Snorkel, a manufacturer of self-propelled aerial work platforms to a new company controlled by Xtreme Manufacturing, LLC (“Xtreme”). Snorkel, which has manufacturing facilities across the globe, supplies a range of “cherry-pickers” used in building, construction and infrastructure projects, offering working heights of up to 40m.
Following the global economic downturn in 2008, Snorkel suffered a catastrophic collapse in its market. In the four years ended 31 December 2012, the cumulative losses of Snorkel were circa £50m. For the first six months of 2013 Snorkel suffered further losses of over £8m. Market demand has now improved but Snorkel has continued to struggle due to working capital constraints. In early 2013 the Board of The Tanfield Group plc (“Tanfield”) took the decision to appoint Cavendish to help find a purchaser for Snorkel.
Xtreme is a manufacturer of telescopic material handlers, under the control of Don Ahern. Mr Ahern owns Ahern Rentals, Inc. (“Ahern”), one of the largest privately held equipment rental companies in the world and a long-standing customer of Snorkel. Xtreme has committed working capital facilities of up to US$50million to support Snorkel’s growth plans and Tanfield will retain a 49% interest in Snorkel along with a preferred interest position of US$50 million.
There are significant operational synergies from the deal. Xtreme intends to make its full line of telescopic material handlers available to Snorkel’s global distributor network. Ahern distributes through 75 equipment rental branches across the USA and will now represent Snorkel’s product line in these branches as well as supporting Snorkel’s global spare parts business and its existing population of product. Additionally, Xtreme and Snorkel intend to pursue potential sharing or combining of facilities, administrative functions and personnel to reduce overhead expenses, and joint technology advances.
Commenting on the deal Jon Pither, Chairman of Tanfield, said: “Tanfield was unable to support the working capital requirements of Snorkel. Cavendish examined a wide range of options and engaged with a significant number of companies from across the globe. Given the requirement for a significant working capital injection, it became clear that the Ahern deal presented the best option for delivering long-term value to Tanfield’s shareholders.
Cavendish played an invaluable role throughout a complex transaction and in particular getting the transaction across the finishing line.
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This has been a highly complex transaction involving 10 jurisdictions. Cavendish has held our hands throughout the process, providing a dedicated team who have done a superb job; this has greatly reduced interruptions to our businesses whilst adhering to the original timetable. Cavendish has achieved a very successful sale at a fair price to a buyer who will enjoy significant strategic value from the purchase.
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