China's Zoomlion abandons $3.4-bn bid to buy US crane maker Terex Corp
27 May 2016
China's Zoomlion Heavy Industry Science and Technology Co today abandoned its $3.4-billion bid for the whole of US crane maker Terex Corp, paving the way for Finland's Konecranes to buy a smaller division of Terex.
Recent negotiations with Zoomlion hit a roadblock over ''crucial terms'' despite both companies trying to find a solution, the Hunan province-based company said in a statement today, without giving further details.
Konecranes said that it will continue to work towards completing the acquisition in accordance with the stock and asset purchase agreement.
Terex will pay Zoomlion a termination fee of $37 million as per the terms of its earlier negotiated merger agreement.
Konecranes and Terex had in August last year agreed on an all-share merger, but Zoomlion entered the race in January this year and offered to buy Terex for $30 per share and a month later sweetened the deal by adding a special dividend for Terex shareholders of $1 per share, taking the deal value to more than $3.4 billion.
Since Terex provides mobile harbor cranes in US ports that are seen as a critical part of the country's infrastructure, a deal with Zoomlion would have automatically invited scrutiny from the Committee on Foreign Investment in the US.
Early this month, the Finnish company scrapped plans for a full merger and instead agreed to buy just part of Terex' cranes business for ports and factories for €1.1 billion ($1.3 billion). (See: Konecranes to only buy Terex's Material Handling and Port Solutions business for $1.3 bn) http://www.domain-b.com/industry/Engineering/20160517_business.html
Under this new deal, Terex would sell its Material Handling and Port Solutions business for $820 million in cash and 19.6 million shares of Konecranes.
Post closing, Terex would own about 25 per cent of Konecranes and have the right to nominate two directors to its board.
The sale ''to Konecranes is good for our customers, team members and shareholders,'' John Garrison, Terex president and CEO, had earlier said in a statement. ''In addition, it will significantly reduce Terex's debt levels, improves our balance sheet and gives us longer term financial flexibility to invest in our business and buy back shares.''
Terex's main products are aerial work platforms, cranes and material handling equipment, and its market is mainly concentrated in the US and the Europe.
Terex is a lifting and material handling solutions company reporting in five business segments - aerial work platforms, construction, cranes, material handling & port solutions and materials processing.
It manufactures a broad range of equipment for use in various industries, including the construction, infrastructure, manufacturing, shipping, transportation, refining, energy, utility, quarrying and mining industries.
It also provides financial products and services to assist in buying its equipment through Terex Financial Services.
Commenting on the deal, Panu Routila, president and CEO of Konecranes, said, ''There are a number of key points that define the rationale of this deal. This acquisition will enhance our position as a focused and global leader in service and equipment in industrial lifting and port solutions.''
Konecranes is in the lifting businesses, serving a broad range of customers, including manufacturing and process industries, shipyards, ports and terminals.
It provides lifting solutions as well as services for lifting equipment and machine tools of all makes.
The Nasdaq Helsinki-listed company employs 11,600 people at 600 locations in 48 countries and had annual sales last year of €2.126 million.