Konecranes to Buy Terex Unit; Merger Plans Scrapped

Konecranes has signed an agreement to acquire from Terex Corporation its Material Handling & Port Solutions (MHPS) segment against consideration consisting of cash and shares and to terminate the previously announced business combination agreement. The acquisition is valued at €1,126 million.

The acquisition of MHPS will improve Konecranes’ position as a focused global leader in the industrial lifting and port solutions market. Konecranes will achieve substantial growth opportunities in the service business as well as critical scale for further technological development.

Konecranes’ recent investments in business infrastructure and global footprint optimization will provide significant earnings leverage. Based on 2015 financials, Konecranes and MHPS had aggregated sales of €3,517 million, adjusted EBITDA of €267 million (excluding synergies) and a total workforce of approximately 19,000.

The Stock and Asset Purchase Agreement may be terminated by Terex prior to May 31 2016, if it enters into, or reasonably believes that it will promptly enter into a legally binding merger agreement with Zoomlion Heavy Industries Science & Technology Co. Ltd., in which case, it will compensate Konecranes with a termination fee of $37 million.

The acquisition, valued at €1,126 million enterprise value based on Konecranes closing price of €20.60 as of May 13 2016 on a cash and debt free basis, will bring together a range of leading brands and offer significant industrial and operational synergies targeted at €140 million p.a. at EBIT level within three years from closing.

Rubber-tired portal harbor cranes are part of Terex’s port solutions range. Picture: Terex

Terex will receive $820 million (€723 million) in cash and 19.6 million newly issued Konecranes class B shares, making Terex a 25% shareholder (calculated from shares outstanding on April 30 2016). The class B Shares to be issued to Terex will be created through an amendment to Konecranes’ Articles of Association and will have the same financial rights as Konecranes ordinary shares but are subject to voting and transfer restrictions as well as differing Board nomination rights described in more detail below and in Appendix 1.