Terex asks Zoomlion to improve its $3.3bn offer
Terex Corporation explores bid from Zoomlion after pausing its planned merger with Konecranes
Terex has asked China’s Zoomlion to sweeten its $3.3bn offer in order for it to abandon its merger agreement with Finland’s Konecranes, according to Reuters sources familiar with the matter.
The $30 a share offer from Zoomlion already represents a significantly higher valuing of Terex stock at face value than the potential of the merger with Konecranes, which would create a company with combined assets of $2.5bn and some $10bn in sales.
However, Terex has argued privately that the synergies with Konecranes in the material handling and port systems businesses of the two companies mean that Terex is worth more than the $30 per share in cash that Zoomlion has offered.
The response illustrates that Zoomlion’s main stumbling block in its negotiations with Terex is price, rather than concerns that the US could block the deal over Terex’s ties to the US military and ports.
Negotiations between the two companies could remain at an impasse such a situation, as Zoomlion has apparently not shown any willingness so far to raise its offer.
It is also unlikely that the Chinese party will have been encouraged by the 2015 results of Terex, which reported revenues of $6.54bn for 2015 – a 10.5% decrease on the $7.31bn recorded in 2014.
Konecranes has offered 0.8 if its shares for each Terex share. It has argued that the two companies can face the downturn in their cyclical industry more effectively if they join forces, and that the shareholders of the combined companies will reap substantial profits in an upturn.
Terex meanwhile has 97 so-called priority-rated contracts with the US government that could attract scrutiny from the Committee on Foreign Investment in the United States under a Chinese takeover.