Atlas Copco, the huge Swedish-based diversified manufacturer, said Monday it intends to split into two listed companies, one focused on industrial customers and the other focused on mining/civil engineering customers.
The company also announced that Mats Rahmström, currently head of its Industrial Technique business, will become president and CEO of the Atlas Copco Group effective April 17. He succeeds president and CEO Ronnie Leten, who is stepping down after eight years.
Rahmstrom, 51, had been a leading candidate to take over as head of Atlas Copco. During his time at Industrial Technique, which sells industrial power tools and car assembly gear, its sales have doubled and margins have become the highest in the group.
The industrial company, which will continue to be known as Atlas Copco, has annual sales of $8.3 billion and about 33,000 employees.
The new company would be initially known as NewCo AB’s Mining/Civil Engineering Group and consist of Mining/ Civil Engineering and Rock Excavation Technique Construction Tools division with related service operations. The group would have about 12,000 employees.
A new president will be appointed to head the company.
The NewCo Company is a working name only, the company said. The newly created company, which has sales of about $3.1 billion, will focus on mining and construction tools and will be spun off to shareholders in a tax-free distribution.
“We see that there are very few synergies between the businesses with a very limited overlap of customers," Atlas Copco Chairman Hans Straberg told a news conference. "We have now grown the company in such a way that it makes sense to have these two businesses stand on their own.”
Straberg said the companies will benefit “from a more focused management responsibility.”
Under the proposed split, Atlas Copco AB Industrial would consist of Compressor Technique, Vacuum Technique, Industrial Technique, Portable Energy division and related services and its Specialty Rental division.
Both businesses, which the company said are global leaders in their respective areas, will be headquartered in Sickla, Sweden.
If the shareholders decide in favor of the proposal at its general annual meeting in 2018, the split of the Group is planned to be done through a share distribution, whereby Atlas Copco AB’s shareholders will receive shares in NewCo AB in proportion to their existing shareholding.
The intention is to list NewCo AB on the Nasdaq Stockholm stock exchange in Stockholm, Sweden, in the second quarter 2018.
Atlas Copco is a provider of sustainable productivity solutions. The group serves customers with compressors, vacuum solutions and air treatment systems, construction and mining equipment, power tools and assembly systems. Atlas Copco develops products and service focused on productivity, energy efficiency, safety and ergonomics.
The company founded in 1873, is based in Stockholm and has a global reach spanning more than 180 countries.
Its Chicago Pneumatic Division, or CP, is a well-known brand in the U.S. and its roots go back more than a 125 years. CP represents tools and compressors and other products that the company says are engineered for high performance. Atlas Copco purchased Chicago Pneumatic in 1987. A year later more new products were launched than at any time since the late 1970s, such as screwdrivers, assembly tools and new ratchet wrenches
Atlas Copco has made extensive acquisitions over the years, a trend that has continued the past few months. In December Atlas Copco acquired Air Power of Nebraska Inc., a compressed air distributor headquartered in Omaha, NE. The company sells, installs and services compressed air products and related systems to customers in the surrounding region, including Nebraska, Iowa and South Dakota.
And this month it acquired the business of hb Kompressoren Druckluft- und Industrietechnik GmbH, a German distributor and service provider of industrial air compressors and related systems.
On Monday, the company also announced that it has agreed to acquire German-based Erkat Spezialmaschinen und Service GmbH, a manufacturer of drum cutter attachments for excavators. The attachments are used primarily in construction and demolition as well as in quarries and tunnels.
In recent years, most of Atlas Copco’s acquisition activity has involved its industrial tools and compressor divisions.
Atlas Copco also said this month that it is divesting its road construction equipment division. The reason for the planned divestment is that the division does not have the economies of scale to become No. 1 or No. 2 in the market segment, the company says.
The road construction equipment division, part of the Construction Technique business area, manufactures rollers for asphalt and soil applications, planers and pavers. The products are known under the Dynapac trade name.
The business includes sales and service operations in 37 countries and production units in five countries; Sweden, Germany, Brazil, India and China. The business had 1,265 employees and revenues of $325.4 million in fiscal 2016.
