Konecranes-Terex sale to form $4bn crane business
Konecranes and Terex proceed with deal that will render the Finnish firm supreme in EOT cranes
The purchase of the Demag overhead crane and Gottwald port crane divisions of Terex by Finland’s Konecranes will make it world’s undisputed leader in electric overhead travelling (EOT) cranes and a strengthened player in port cranes.
The $1.3bn deal with Terex, split across cash and shares, comes in the wake of an aggressive bid from China’s Zoomlion the US group, but preserves the spirit of the proposed Konecranes-Terex merger and paves the way for the combined business to trim some $159m in overlapping overheads.
Assuming the sale goes ahead, Terex’s port and material handling division will add around $1.57bn to Konecranes 2015 revenues of around $2.41bn. The enlarged business will be 25% owned by Terex and employ 19,000 people.
Konecranes is now considering accelerated timeline for its implementation of synergies with the Terex businesses based on the extensive integration planning work already carried out by the two companies.
Of the total of $159m (per annum) synergies targeted within three years, $39.6m is expected to be achieved across procurement, supply chain and logistics within 12 months of the acquisition.
Further synergies should subsequently be achieved across the manufacturing footprint of the two businesses and more broadly across their selling, general and administrative (SG&A) expenses.
One-time implementation expenses are expected to be $147m, with $68m of capex expected.
At the same time, dynamic synergies related to new opportunities in global service operations and the brands’ complementary product ranges and geographical footprints are expected to lead to significant growth in earnings.
Konecranes chairman Christoph Vitzthum said: “For Konecranes, this acquisition is a milestone in building our future. The Acquisition makes it possible for us to realize a long list of synergies and we expect it to create substantial value for our customers and shareholders.”
Panu Routila, president and CEO of Konecranes, added: “This acquisition will prove crucial to improving our position as a global partner in services, industrial lifting and port solutions.
“The combination of our businesses brings together a family of leading brands that will open new growth opportunities in the service business and creates critical mass for future technology development.”