Terex-Konecranes merger integration suspended “temporarily”

Terex-Konecranes merger integration suspended “temporarily”

Konecranes has confirmed that post-merger business integration planning discussions with Terex are suspended although it still expects the deal to be completed.

In a statement, the Finnish company said that the halt had come due to the “challenging business environment” coupled with the amount of progress has already been made over the past seven months.

On February 22, Konecranes chairman Stig Gustavson, told Reuters: “The operative development work (between Konecranes and Terex) has come to a point where we can’t go forward before we have approvals from competition authorities.”

Although Chinese company Zoomlion’s US$3.3bn bid to acquire Terex has resulted in much speculation that the Konecranes merger could fall through, the Terex board’s position is still that it recommends the merger.

“Everything else is going forward as it should be,” Gustavson added, stating that the deal had so far won approvals from two jurisdictions out of the required ten.

He also said that, in the best case, he now expects the deal to close in “late June, or July-August.”

Regarding the Zoomlion bid, there are concerns that US national security worries could scupper the viability of the deal due to the amount of Terex equipment at US ports [2% of Terex revenue is directly leveraged to North American port crane equipment].

Terex has 97 priority-rated contracts with the US government that could attract scrutiny from the Committee on Foreign Investment in the United States (CFIUS).

A formal CFIUS review of Zoomlion’s acquisition of Terex would likely take up to 75 days, although investment bank JP Morgan noted in early February 2016 that ” the likelihood of CFIUS blocking this deal [is] very low”.

According to the bank, port crane equipment would be difficult to define as “critical infrastructure” since the business is primarily hardware, not software monitoring a port.

US investment bank Jefferies and financial services firm Morgan Chase, last week claimed that a Zoomlion takeover of Terex is the most likely scenario to happen.