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Toromont Industries to acquire Hewitt Equipment

Toromont Industries Ltd, a diversified industrials company providing specialized capital equipment and ongoing support to customers in various sectors, today announced that it has entered into a definitive agreement to acquire the businesses and net operating assets of the Hewitt Group of companies in exchange for consideration of $917.7 million cash plus the issuance of 2.25 million Toromont shares (nominally $100 million based on 10 day average share price as at signing) for a total consideration of $1.0177 billion.

Hewitt Equipment Limited is the authorised Caterpillar dealer for the province of Québec, Western Labrador and the Maritimes, as well as the Caterpillar lift truck dealer for most of Ontario. Hewitt is also the MaK dealer for Québec, the Maritimes and the Eastern seaboard of the United States, from Maine to Virginia. All amounts are in Canadian currency.

"Acquiring Hewitt marks a very important milestone for Toromont and is beneficial to our customers, employees and shareholders on many levels," said Scott J. Medhurst, Toromont President and CEO. "The Hewitt family has built a world-class organisation throughout much of Eastern Canada over many decades with a strong reputation for quality service among its customers. We are very proud to have the Hewitt Group join us and are privileged to be taking on the stewardship of this excellent business and building on the family legacy.”

Mr. Medhurst added, "The acquisition delivers a substantial growth opportunity, allowing us to expand into the significant Québec, Western Labrador and Maritime markets, and strengthens our expertise in the mining, construction, power systems and forestry sectors."

"For more than 65 years, the Hewitt Group has been at the centre of the resource and construction industries in Quebec and the Maritimes, helping to get roads, dams and mines built and running," said Jim Hewitt, Chairman and CEO of Hewitt Equipment. "With the trend towards consolidation taking root in each of the sectors in which Hewitt operates, we are confident that our customers and employees will benefit from working within an even larger organization with access to even more resources and capital."

Headquartered in Pointe-Claire, Québec, Hewitt sells, rents and services the full line of Caterpillar and other products through its six operating business entities: Hewitt Equipment, Atlantic Tractors, Location Hewitt/Hewitt Rentals, Hewitt Material Handling, Montréal Hydraulique and SITECH QM. Founded in 1952, Hewitt has 45 branches across Eastern Canada and employs more than 2,000 people. Hewitt is privately held.

In the year ended December 28, 2016, Hewitt generated revenues of over $1.0 billion, operating profit of $66.4 million2 and net earnings of $46.6 million. Toromont advises that Hewitt's historical performance should not be viewed as guidance for future performance.

Upon close of the acquisition, Toromont's Caterpillar dealership will operate 120 branches in Nunavut, Manitoba, Ontario, Québec, New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland & Labrador, giving the company one of the largest sales territories in the Caterpillar dealer network. Toromont expects to maintain existing facilities and under its decentralized business model, regional leadership will continue to run their businesses locally - empowered to make decisions in the best interests of their customers.

Mr. Medhurst added, "The acquisition is the largest in our 56-year history and is only possible because of the strength of our balance sheet and proven track record as a disciplined operator focused on generating steady growth across each of our core markets. We are very proud of our partnership with Caterpillar and appreciative of this opportunity. "

Toromont will fund the acquisition through current cash on hand, unsecured debt financing of up to $750 million and the issuance of 2.25 million Toromont shares (equating to $100 million based on the 10 day average share price prior to this announcement). A syndicate of financial institutions has provided Toromont with committed bank financing of up to $750 million to fund the acquisition and a revolving working capital facility of up to $500 million. Prior to close, Toromont intends to launch a bond offering (private placement) of up to $400 million and correspondingly reduce the draw on the bank financing. The transaction is expected to close by mid-October, 2017, subject to the timing of certain regulatory consents, including TSX approval, and customary closing conditions.