Astec Industries could be takeover candidate following CEO exit

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Astec Industries (NASDAQ:ASTE) could be a potential takeover target after maker of roadbuilding and industrial equipment on Friday announced that its CEO stepped down.

"With no debt, strong US customer relationships and market position in asphalt plants, ASTE could become a target," Baird analyst Mircea Dobre wrote in a note on Monday.

Potential buyer for Aste include Deere (DE), which could "easily" digest the company, and Terex (TEX) could also be a possible bidder, according to Baird's Dobre. Baird has a neutral rating on Aste (ASTE).

Astec (ASTE) announced on Friday that Barry Ruffalo resigned as president and CEO, sending the company's shares down 12%. The company's board named Jaco van der Merwe as a replacement. Astec rose 1.8% on Monday.

Deere (DE) has "clear interest" in roadbuilding, especially considering its 2017 acquisition of Wirtgen, and there is a decent amount of product overlap, Dobre wrote.

While Terex (TEX) could also consider an acquisition, it may be harder to do a deal given its current debt load, thought not impossible, according to Dobre.

This is not the first time Baird's Dobre has speculated about a potential Terex (TEX) bid for Astec (ASTE). In February 2019 Dobre raised the possibility of Terex offer after Terex had delayed its earnings release. The note came about a month after former ASTE CEO Ben Brock resigned.