Wind tower manufacturer Trinity Industries Inc. has announced that it has entered into definitive agreements with Otter Tail Corp. to purchase certain property, plant and equipment of DMI Industries Inc. for a purchase price of approximately $20 million.
The assets to be acquired consist primarily of approximately 665,000 square feet of heavy manufacturing capacity and equipment located in North Dakota, Oklahoma and Ontario.
The Ontario facility acquisition has already closed. Trinity will take possession of the property, plant and equipment in the remaining facilities in two separate closings, which are both expected to close in the fourth quarter.
Last month, Otter Tail announced it was putting DMI up for sale, citing reduced demand and an unfavorable policy environment.
"The market value for DMI's assets has been significantly impacted by reduced demand for wind towers due to adverse market conditions affecting the industry, including uncertainty regarding renewal or extension of the federal production tax credit for investments in renewable energy resources," Otter Tail said in a statement in August.
Trinity’s plans for DMI are unclear, especially in light of the company’s recent announcement that it was planning on repositioning its resources away from wind turbine tower manufacturing.
"During the second half of 2012, we are repositioning a portion of our production capacity to meet the growing demand for products serving the oil, gas and chemicals industries," Timothy R. Wallace, Trinity’s chairman, CEO and president, said in a statement last month. "These products are well aligned with our core competencies. The repositioning will include, among other things, the conversion of certain facilities from manufacturing wind towers to railcars."
However, it is clear that Trinity will remain involved in wind tower manufacturing.
“I am pleased with this opportunity to expand our manufacturing capacity at a very attractive valuation,” Wallace said in a statement regarding the DMI acquisition. “These facilities are capable of producing many of the products Trinity currently manufactures, which will serve to further enhance our overall manufacturing flexibility.”