After months of speculation, heavy machinery specialist Bell Equipment has clinched a transaction with Japanese industrial conglomerate Hitachi. But it’s not quite the deal some hopeful market watchers had been punting.
Last week, Bell, based in Richards Bay, announced a supply agreement with Hitachi Construction Machinery Americas (HCMA) whereby Bell will supply Landcros articulated dump trucks (ADTs) to HCMA for distribution through its own network in the US and Canada.
Bell’s share price was largely unmoved by the development, remaining range bound between R38 and R39 despite the agreement feeding perfectly into the group’s long-term strategy to grow production volumes of its ADT product line into North America.
The group also clinched an agreement with CNH Industrial America in March this year to supply Case Construction Equipment motor graders for exclusive distribution in North America. Outside of these agreements, Bell ADTs are still distributed by Bell Trucks America — the group’s non-exclusive independent distributor in the US.
Bell does not give a breakdown showing US sales volumes, which in the last reporting period were lumped with European sales. At this stage it is difficult to quantify possible volume increases for Bell’s ADTs — remembering, too, that the first sales of Landcros ADTs are only expected from April 2027.
Long-term prospects
Bell CEO Izak van Niekerk would only say that the group believes the expanded distribution footprint has the potential to boost sales.
While the arrangement could be significant for long-term sales, there was speculation earlier this year that Bell, which has had two “internal” buyout attempts in recent years, might be the subject of a takeover bid. Longtime Bell shareholder Shipyard Capital, a US investment boutique, speculated openly in August that Hitachi would buy out Bell.
Takeover sentiment was also fuelled by Barloworld, owner of the CAT heavy equipment brand, recently being bought out by the Saudi group Zahid. Shipyard pointed out that Hitachi and its largest shareholder, Itochu, had been hinting almost weekly about a forthcoming acquisition to reinforce Hitachi’s position in mining trucks.
Shipyard also noted that Bell had been liquidating old parts at scale, “just the sort of thing you do to clean up working capital before an acquisition”. The US investor did, at the time, concede that these factors might point to an extended partnership agreement with Hitachi, which the FM had previously pointed out would not be the worst outcome for Bell. Punters will inevitably still ask whether the closer working arrangement between Bell and Hitachi might lead to the latter taking a strategic equity stake or even pressing for a full takeover.
Carson Mitchell, managing member of Shipyard Capital, tells the FM that the tie-up creates a puzzling conflict between HCMA and Bell Trucks America, with both distributing Bell ADTs in the US. “I still suspect that HCMA will acquire IA Bell — Bell’s 70% owner. But I’ve been wrong so far.”
Richard Cheesman, founder of Urquhart Partners, says an equity arrangement between Hitachi and Bell is possible, “but it’s difficult to say at this stage”. Cheesman notes that Bell already does some white-label manufacturing (including motor graders for Case in North America) and Hitachi has recently entered into a similar arrangement with another original equipment manufacturer for compact track loaders.
Both sides benefit
“So, the deal makes sense for both parties in its own right. That said, depending on how successful the partnership is and how Hitachi’s strategy develops, it could potentially lead to something larger over time,” Cheesman says.
Chris Logan, CEO of Opportune Investments, says despite the scant detail on the Landcros supply agreement, it is a significant step forward. “Taken together with the 2025 launch of Bell’s motor grader and its agreement to supply Case-branded graders to CNH in North America, Bell now has its longest runway for growth since the Deere era.” IA Bell & Co bought John Deere’s 31% stake in Bell five years ago.
Logan stresses the importance of two major global manufacturers opting for Bell’s engineering rather than developing their own products. “That gives Bell serious North American distribution without the cost of building its own network, and the extra volume through Bell’s factories should provide meaningful operating leverage.”
Logan notes that Bell has said replacing the 30% US reciprocal tariff with a 10% global tariff improves its ability to supply the US from South Africa, while the group’s ungeared balance sheet leaves it well placed to handle higher volumes.
As for the muted market reaction to the agreement, Logan explains that previously the market rated Bell very differently. At the end of 2007, the share traded at more than 3.5 times NAV, compared with about 0.64 times today — which, he contends, could mean material medium-term upside as the positive developments translate into reality.
“The muted share price reaction suggests the market is still pricing Bell on the prospect of another buyout offer rather than on its enhanced business prospects.”
