Alta Equipment Group Inc. (NYSE: ALTG) has entered into a definitive agreement to acquire Ecoverse Industries, LTD, a full line distributor of industry-leading environmental processing equipment headquartered in Avon, Ohio, with 15 sub dealers throughout North America.
“The acquisition of Ecoverse is exciting for our business as it represents our first investment into large-scale equipment distribution, giving us the master dealer rights to distribute best-in-class environmental equipment to dealers and customers throughout North America,” said Ryan Greenawalt, Chief Executive Officer of Alta. “Ecoverse has a long standing track record in the environmental processing equipment sector as a distributor of high-end equipment which is used in biofuel, composting, and various waste and recycling applications. The Ecoverse acquisition immediately positions Alta as an industry leader in a sector where demand for eco-friendly waste solutions and recycling continues to grow. We welcome Ecoverse to the Alta family.”
Strategic and Financial Highlights
- Exclusive distribution rights to North America for European equipment OEMs, including Doppstadt, Backus, Backers, and Tiger Depackaging products.
- Increasing size of equipment field population in North America will provide for future parts and service growth opportunity.
- Ecoverse generated approximately $64.3 million in revenue, $10.0 million in net income, Adjusted EBITDA of $10.1 million, and $9.7 million of Adjusted pre-tax net income for the trailing twelve month period through July 2022.
- Given Ecoverse’s asset-light distribution business model and minimal maintenance capex requirements, the Company expects the acquisition to be highly accretive to the Company’s EBITDA to cash flow conversion and earnings per share ratios.
- Deal is structured as an asset acquisition allowing for step-up in tax basis of assets acquired.
Additional Transaction Details
- The purchase price includes $42.5 million in cash, $2.5 million of Alta common stock and a $6.0 million seller note, at close. In addition, the purchase price includes contingent consideration in the form of an earn-out whereby sellers can earn an additional $4.0 million of Alta common stock and $12.0 million of cash over a five-year period subject to future EBITA growth.
- To the extent EBITA remains flat at July 2022 trailing twelve-month levels throughout the earn-out period, the total purchase price will be $59.0 million ($52.5 million in cash and $6.5 million in stock). Other iterations of the ultimate purchase price range from $51.0 million to $67.0 million based on future EBITA performance.
- Ecoverse’s brand name, employees, and management team will remain in place post-close.
- The transaction is subject to customary closing conditions and is expected to close in the fourth quarter of 2022.
- Including Ecoverse, since the Company’s initial public offering in 2020, Alta has completed 13 acquisitions which have contributed $440.3 million in revenue, and $52.5 million in Adjusted EBITDA.