Don Thurston Blog

Some Times You Have to be Lucky and Good

This is a business story of good management, good luck and unintended consequences.

Bucyrus Erie is a very successful provider of large equipment for the construction and extractive materials industries. Several decades ago, Bucyrus acquired The Excello Corporation. Excello manufactured heavy earth-moving equipment such as shovels and drag lines. By all indications the deal was well-considered, well-priced and complementary in most of the important areas. Excello corporation’s valuations were reasonable, including the price earnings multiple, the earnings per share growth, a sound balance sheet and a high return on shareholder’s equity. The acquisition price reflected these parameters.

Bucyrus Erie was acquired by Caterpillar In July, 2011.

Within the Excello portfolio of products was a dairy equipment manufacturer. A sound business unit but not the primary reason for the acquisition. The deal took place at a time when dairy product home delivery was still popular and the supermarket had not taken over as the principal food distribution system. Suburbs were developing and living styles changing accordingly.

The dairy equipment division, owned a patent on a new system for packaging milk that was consumer friendly and very suitable to the burgeoning super market format. We have all had considerable interaction with the system. It is that convenient but sometimes cantankerous milk container we open by prying the top into an easy pouring spout. Much earlier you would have read on the spout “Under Patent to the Excello Corporation” … a label that remained there until the patent expired.

While no profitability numbers are available specific to this invention, the longevity of the packaging system is a sound indicator of success.

Look at the spout the next time you open a container of milk and marvel at the importance of a system that led to such convenience and efficiency.

From the vantage point of Bucyrus Erie, rewards sometimes come from being lucky and good.

Thanks for reading!

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