Rob Giebel has left Manitowoc and been replaced as Crane Group president and general manager by Glen Tellock, previously chief financial officer of Manitowoc Company Inc.
The move appears to pave the way for Jeff Bust, a former president to Manitowoc Cranes and currently CEO of Grove Worldwide, to become CEO of the newly enlarged Manitowoc Crane Group once the Grove acquisition is completed. The deal is expected to close this month or early next month without Terex opposing the coming together of the National and Manitowoc boom truck businesses. A Grove insider pointed out: ‘We’ve kept quiet during every one of Terex’s acquisitions. If they had started complaining about us and Manitowoc now, we could cause trouble for the Demag deal.’
Explaining Giebel’s replacement with Tellock, Manitowoc Company Inc president and CEO Terry Growcock said: ‘With the pending Grove acquisition, we assessed the organisational needs required to run a billion-dollar crane segment. Glen’s solid financial experience will be a tremendous asset in managing our crane business, which has tripled in size in the last 14 months. As senior vice president and CFO, Glen was intimately involved in setting the strategic direction for the company, and played an instrumental role in the successful acquisition of Potain and our pending acquisition of Grove Worldwide. The relationships Glen has built with both of these organisations will be vital to their future success. Furthermore, Glen’s in-depth knowledge and understanding of the management principles of EVA will help our crane group realise its full potential and maximise shareholder value.’
The company said that Giebel, who headed the crane division in the greatest period in its history, had ‘resigned to pursue new opportunities’.
Looking forward, Tellock said: ‘I am very excited to take on this new assignment. When the Grove acquisition is completed later this summer, the crane segment will account for approximately 60 percent of Manitowoc’s revenues and nearly half of its earnings. Our crane segment is extremely well positioned to grow globally and I look forward to leveraging the strengths of each of our market-leading brands going forward.’
Tellock’s appointment comes possibly because of, or perhaps in spite of, leading credit rating agency Standard & Poor’s downgrading of Manitowoc’s rating in May to double B in the wake of the Grove deal.
Said the agency’s research department: ‘Although the transaction will broaden Manitowoc’s crane product lines and provide some synergy opportunities, it also will lead to elevated financial leverage and increased exposure to the highly cyclical and challenging crane business, resulting in heightened financial risk. In addition, the integration of Grove, which has had operational problems in the past, could prove to be difficult. The company’s increased debt levels during the current challenging economic environment raises Standard & Poor’s concerns about the company’s ability to restore its financial profile over the near to intermediate term in a manner consistent with the current ratings. The acquisition, valued at $270m, will be funded with $200m, in cash and 2 million shares of Manitowoc’s common stock currently valued at about $70m. Grove, which emerged from Chapter 11 reorganisation in September 2001, had sales of $700m and EBITDA of $41m during fiscal 2001. The transaction represents a debt to EBITDA acquisition multiple of about 5.0 times. Pro forma for the acquisition (expected to close by June 30, 2002), Manitowoc’s total debt to EBITDA would be 3.7 times, and total debt to capital would be about 68%. Standard & Poor’s had expected total debt to EBITDA to strengthen to about 3.0 times in the near term.’
In summary, this means that Manitowoc’s finances have to be very carefully and tightly managed to retain the support of investors.
With regard to future changes at the top of the crane group and integration of Grove personnel, it is not legally possible for Manitowoc to make any announcement about the future role of Grove staff until the acquisition completes. But with 41 year old Tellock’s strengths clearly lying in finance rather than manufacturing or selling cranes, the prospect of the experienced Bust in due course joining him at the helm as CEO seems great.
Tellock joined Manitowoc in 1991 as director of accounting, and has served as corporate controller, vice president of finance, and treasurer. He became CFO in 1999, and added the senior vice president role in 2000.
Bust was previously head of Manitowoc Cranes but left to head up Grove after being pipped by Growcock to the position of group chief. Growcock had previously been Bust’s opposite number in Manitowoc’s food service division.
