Manitowoc’s $300m acquisition of Potain may well have completed by the time you read this. The US manufacturer has been seeking a major purchase to expand its product line beyond crawler cranes and boom trucks and to expand its geographic presence. The French tower crane manufacturer fits the bill on both counts.

“It’s a good deal for us,” says Potain president and CEO Jean-Yves Bouffault. Firstly, there is no overlap in the product lines of the two companies; secondly, there will be no factory closures that often follow mergers and acquisitions; and thirdly, the sales patterns of the two fit well together. Manitowoc has 90% of its sales in North America while Potain has 95% of its sales outside North America.

The fact that the two companies are a similar size and, from the outside at least, appear to have similar cultures, should help integration. Potain made an operating profit of E35m ($40m) in 2000 on a turnover of E287m ($324m). Manitowoc Cranes made an operating profit of $63m on a turnover of $376.3m. It is funding the acquisition by marketing a E175m high-yield bond.

Bouffault reveals that Potain first approached Manitowoc two years ago to discuss some kind of cooperation. Potain was missing out on a rising tower crane market in North America and had blemished its reputation in that market some years ago by pulling out when the market declined.

Those talks stalled last year after the then general manager of Manitowoc Cranes, Ron Schad, left the company. Then in September last year Manitowoc approached Potain’s parent company Legris Industries with a deal that was finally agreed on 4 March.

Bouffault welcomes the change in ownership, even if it does mean Potain is no longer French-owned. His pleasure seems to be shared by Potain employees who know that Legris’ commitment to cranes was waning and that Terex had pitched for Potain several times. “I think the fit between the strategy of Terex and the strategy of Potain is not good,” Bouffault says.

The prime benefit for Potain is that Manitowoc should open up North America for it. “The fact that we are owned by Manitowoc will give our customers confidence in Potain.” he says.

Over at Manitowoc, even more benefits are envisaged. “What it brings us is not just a great product line and people, but also their infrastructure in sales, service and manufacturing,” says Manitowoc sales and marketing vice president Larry Weyers.

Manitowoc Cranes general manager Rob Giebel explains that Manitowoc’s growth strategy is focused on three key aims: adding product to the portfolio, bolstering international distribution and gaining international manufacturing capability. Potain has about 250 dealers worldwide and eight manufacturing locations in Europe and Asia.

Manitowoc’s ambitions to grow market share outside North America have been thwarted by exchange rates. The strong dollar has made even its most European-friendly product, the 999 crawler, unattractive to most buyers.

Potain’s factory in Germany, what used to be BKT, looks particularly capable of handling crawler crane manufacturing, according to Weyers, and Potain’s China facility could also add crawler manufacturing one day. Producing crawler cranes in Europe might free up capacity in Wisconsin to enable Manitowoc to build tower cranes in its own factory.

Manitowoc has explored the possibility of manufacturing lattice booms in Europe before but found that for the number of cranes it currently ships to Europe, it was cheaper to produce them in Wisconsin and ship them across the Atlantic. With Potain on board, it might be possible to make the numbers work. But given the limited market for crawlers in Europe, and given that the technologies for producing tower sections and lattice booms for crawlers are really quite different, that option may not prove viable.

This does not matter, says Giebel. Potain was bought as a strategic acquisition, not with any view to making changes to create synergies. “We included no synergies in our acquisition strategy. If we find any, that’s an upside. If we don’t, that’s okay too,” he says.

Distribution and branding are also still up for discussion. Regarding distribution, Weyers believes that in North America there are similarities between Potain’s large towers and Manitowoc’s big crawler cranes, and there are similarities between Potain’s self-erectors and Manitowoc’s boom trucks. Outside North America, it is hard to see significant efficiencies being found in distribution.

As for branding, it is envisaged that the Potain name will be retained for tower cranes, since the $300m acquisition price includes $150m for the Potain brand. “The name is stronger than the turnover,” says Bouffault.

Weyers says: “My opinion is that you buy the company for the brand and the people. So why change the brand?” He is pragmatic, however. “But if we can use our brand name to make more money for the customers, we’ll have to look at it.”