Under the deal ESCO will take over the service-engineering and mining products divisions of Swift Group. Swift Cooling, however, is not part of the deal and will continue to operate under its present management. The deal is expected to be finalised over the next few weeks.
ESCO had been on the verge of signing a deal with Swift last month but the deal fell over. This led to a burst of speculation over Swift’s future, which was not helped by news that the company was laying off some corporate staff.
On June 1, however, ESCO announced it had bought the Australian ground-engaging tools maker.
The US equipment maker already had moved into the Australian market when it set up ESCO Holdings in South Brisbane last year. That operation is headed by former Central Queensland Mining Supplies general manager mining and one-time Bucyrus International Australian managing director Johan Nienaber.
ESCO director of marketing Dan Pizzuto told MiningNews.net that there had been disagreement over the value of some parts of the Swift business.
“Our due diligence turned up some things that made the deal go a bit longer and led to some disagreements over what things were valued at,” he said.
But the companies were able to come to terms and the final parts of the sale process are being finalised.
ESCO’s entry into the Australian market makes things interesting for the ground-engaging tools sector.
Its GET products are being sold under licence in Australia by Bradken. That deal expires on June 30, 2011.
Austin Engineering, another GET maker in Queensland, also has a business relationship with ESCO. It does fabrication work for ESCO in the US at its Wyoming foundry.
Then there is Nienaber’s former employer, CQMS. Swift Engineering makes its dragline buckets.
From ESCO’s point of view, it will not be competing with Bradken on the GET side until after the licence expires. Instead, it will promote its crusher wear parts and bi-metallic buttons and blocks while supporting Bradken’s sales efforts of its products.
Pizzuto said any sales enquiries for its GET products would be fed to Bradken while the licence agreement was in place.
Having the Bradken licence in place does give the US company a good chance to find its feet in the Australian market. Bradken is taking care of its GET business so ESCO can have the luxury of sitting back and learning the market without the pressure of having to sell into it.
