The Toro Company has completed its acquisition of Calgary-based Tornado Infrastructure Equipment Ltd., a manufacturer of hydrovac excavation equipment. The deal, valued at C$279 million, was financed through existing credit facilities and debt arrangements.
On December 18, Baird raised its price target on The Toro Company to $86 from $84 while maintaining a Neutral rating. The firm updated its forecasts after Toro's Q4 results, noting stronger free cash flow and signs that expectations may be starting to bottom.
Toro announced the acquisition on December 8. Tornado's machines are designed for safe excavation in dense urban environments and around critical infrastructure. The company said this makes the business a strong fit within Toro's expanding construction equipment portfolio.
The acquisition positions Toro to benefit from rising demand in vacuum excavation. With Tornado added alongside brands like Ditch Witch and other underground construction products, Toro believes it can widen its reach and strengthen its position in the industry.
Toro expects the transaction to be slightly accretive to adjusted EPS in the first year, with a larger contribution in later years. The company reiterated its expectation for about $3 million in annual run-rate cost synergies over the next three years, mainly from purchasing and manufacturing efficiencies.
Beyond cost savings, Toro also sees potential upside from revenue synergies and working capital improvements over time. The Toro Company is a global provider of outdoor environment solutions, including turf and landscape maintenance, snow and ice equipment, and underground utility construction.