Terex and Konecranes to combine

Terex and Konecranes to combine

US-based Terex Corporation (Terex) and Konecranes Plc of Finland have jointly announced that the two companies will combine to create a single company.

The decision has been approved by their respective boards of directors resulting in a definitive business combination agreement and the resulting all-stock merger of equals.

Once the transactions are completed, Terex shareholders will own approximately 60% of the combined company, with Konecranes shareholders owning approximately 40%.

The new company will be named Konecranes Terex Plc and will be incorporated in Finland.

Explaining the rationale behind the decision, the companies have stated that the combination will bring increased global scale with enhanced competitiveness to rival low-cost emerging market players.  They also see a broader presence in key sectors, with greater opportunity to capitalise on growth trends in the port and industrial sectors through significant operational and corporate synergies and complimentary geographic profiles.

This, they say, will be achieved through a “more robust portfolio of complementary products and customer solutions” brought about by further technology development and enhanced R&D.

Terex CEO, Ron DeFeo, commented: “This merger brings together two great businesses and through synergies provides another lever that is within our control to deliver value-creation to both the shareholders of Terex and Konecranes.  We have a deep respect for Konecranes and look forward to joining forces with them to build a stronger and more diverse company that will be in an excellent position to succeed in a dynamic and highly competitive global industry.”

“The combination of Konecranes and Terex is a defining step in the history of both companies,” added Stig Gustavson, Chairman of Konecranes. “With a focus on lifting and material handling solutions, Konecranes Terex will be in an excellent position to deliver enhanced growth in revenue and margins through several strategic advantages, including significant cross-selling opportunities.”

Adding that there is a “common culture between the two organisations”, with both companies having long histories of designing competitive and innovative solutions, he continued: “Together, we will have the opportunity to expand what Konecranes and Terex have built and become even stronger in the future.”

At a press conference, Konecranes’ outgoing CEO Pekka Lundmark, who will leave the company in September, said: “In port cranes, the portfolios are highly complementary. Terex has a strong position exactly in those areas where we are weaker or not even a player at all – straddle carriers, horizontal transportation or automated guided vehicles (AGVs) and mobile harbour cranes.”

He stated that the merger occurred in a climate of consolidation throughout the ports industry, adding: “In a way this transaction is part of this overall industrial value chain consolidation.”

The combined company will appoint nine directors; five from Terex and four from Konecranes, with the current Konecranes Chairman and Terex CEO becoming, respectively, the Chairman and the CEO of the combined company.  The new company will maintain headquarters in Westport, Connecticut USA and Hyvinkää, Finland and is expected to have approximately 32,000 employees worldwide.

With an estimated pro-forma 2014 revenues and EBITDA of US$10bn and US$845m, respectively, the combined company plans to be listed on Nasdaq Helsinki and New York Stock Exchange.

The transaction is subject to approval by Terex and Konecranes shareholders, along with regulatory approvals and customary closing conditions.  Completion is expected to occur during the first half of 2016.

The Financial Times noted that the deal would enable Konecranes Terex to take advantage of Finland’s 20% corporation tax rate, compared to the 35% figure in the US, which Terex was previously subject to.