Analysts speculated earlier in August that Timothy A. Ford could be heir apparent to Ronald DeFeo as CEO of crane and construction equipment giant Terex Corp., but the president of the Westport, Conn., company's cranes unit has departed in the wake of a top-level executive reshuffling made public on Aug. 19.
The changes follow Terex's Aug. 11 announced merger with Finland-based industrial equipment firm Konecranes that would create a $10-billion firm. Terex revenue last year was about $7.3 billion.
DeFeo, also now chairman of Terex, becomes CEO of the enlarged firm, which will be called Konecranes Terex; Konecranes Chairman Stig Gustavson takes that same role in the enlarged firm, which will be incorporated in Finland and listed on exchanges in Helsinki and New York City. Finland's tax rate is lower than in the U.S.
No reason was given for Ford's departure, nor detail on his future plans.
"We continue to think the timing of the deal makes sense for Terex; its current environment remains challenging and with the [aerial work platform business] softening, we’ve been patiently waiting for the next leg of the Terex story," said Joel Tiss, equipment sector research analyst for BMO Capital Markets in an Aug. 12 note.
"This deal creates scale in industrial lifting," said Tiss, although he said Wall Street concerns include "the strength of end-markets going forward, regulatory approvals, and future leadership of the combined company."
According to ScottTrade, the new company's revenue share in construction will drop to 8% from 11%, its crane segment from 24% to 18%, and its aerial work platform component to 23% from 32%.
Credit Suisse equipment sector head analyst Jamie Cook said "there has been no resolution" as to whether DeFeo's contract, set to expire at year end, will be extended.
According to Tiss, DeFeo could stay on beyond year-end if the boards of both companies request it.
Tiss speculated in his research note that Ford had been "among the leaders" as a possible internal candidate to succeed DeFeo, a highly regarded 20-year veteran. Another possible candidate Tiss named was Steve Filipov, president of Terex's material handling and ports business, who "has been a constant force in restructuring businesses and fixing any nagging issues that crop up."
In its Aug. 19 announcement, Terex did not note any change in Filipov's role, but said that Ken Lousberg, currently president of Terex China, will now lead the cranes unit and head up Terex work in Latin America, which also was under Ford. Terex says it will name a country leader in China "as soon as possible." Lousberg joined Terex through its purchase of Genie in 2002.
George Ellis takes on a new role as president of Terex Construction and corporate senior vice president of operations planning; he retains roles leading the firm's government and India businesses. Vice President Scott Hensel takes on a new role as managing director for Terex's utilities and services businesses.
According to a Credit Suisse report on Aug. 14, Terex shares outperformed, for that week, those of other machinery-focused public firms the investment firm tracks, up over 22%. She said the enlarged firm would generate sales of about $10.6 billion and $1.1 billion in operating profit "within three or four years" after the merger finalizes, which is anticipated in the first half of 2016.
Terex shareholders will own about a 60% stake, while Konecrane shareholders will own 40% in the new company, which will have a total of 32,000 employees.
But according to Tiss, Terex's aftermarket business "while growing, is not as well established as that of its competitors, and has left the company more exposed to cyclical downturns."
One online equipment publication said the management changes are "something of a surprise, although it seems that we have a Terex senior management reshuffle every two to three years."
It said Lousberg, who is the fifth president of Terex Cranes since 2008, "is well qualified for the role" but will have "a lot on his plate" in trying to improve the unit's third place position behind Liebherr and Manitowoc.