Finnish cargo handling equipment manufacturers Cargotec and Konecranes have agreed to merge, aiming to form a global leader in the next generation of sustainable material flow.
The proposed combined company will look to unlock value together through synergies of €100m (US$120m) annually that are expected to be achieved in full within three years from completion, along with complementary skills and increased R&D scale.
The partners, which last year had combined sales of €7bn (US$8bn) and an operating profit of €565m (US$660m), hope to “solve the sustainability challenge” through innovation in automation, robotics, electrification and digitalisation.
Cargotec CEO, Mika Vehviläinen, said: “The future company will have enhanced opportunities to improve the efficiency in customers’ operations and shape the whole industry forward to a more sustainable and intelligent one.
“Together we are stronger and our combined R&D resources will enable us to accelerate innovation in automation, robotics, electrification and digitalisation.”
Konecranes CEO, Rob Smith, said: “The future company will be a global leader with its unparalleled product range, global service network, industry-leading intelligent technology and an unwavering commitment to safety.
“Supporting this will be top talent from both Konecranes and Cargotec and a passion to lead in sustainable material flow to deliver the very best for our customers. The timing is right, and the logic and fit of this combination are compelling.”
The partners’ vision for the company is based on decarbonisation, safety, productivity and efficiency as well as maximising the lifetime value of the equipment and solutions of its customers.
Initially, they will aim to deliver above-market sales growth and comparable operating profit in excess of 10%.
The future company’s current core comprises lifecycle services, intelligent equipment, software, systems engineering and optimisation while its intelligent service technology offering will comprise remote monitoring, machine learning, digital tools as well as sales, planning and technical support platforms.
Through the merger, it is hoped that the new entity will be better positioned to provide customers with integrated services, equipment, software and systems engineering and optimisation, resulting in solutions that have greater customer value than the sum of their parts.
Konecranes Chairman, Christoph Vitzthum, stated: “The combination of Konecranes and Cargotec, with their iconic technology brands, innovation capabilities, talented people and focus on sustainability, will create a company that is clearly greater than the sum of its parts, delivering robust synergies and creating a unique platform for shareholder value creation.
“Customers will benefit from the companies’ combined technologies and even better service capabilities. This is a pivotal moment for Finnish industry and the material handling industry as a whole, and we are fully ready and committed to seize this historic opportunity.”
Cargotec Chairman, Ilkka Herlin, said: “Sustainability has been high on Cargotec’s agenda since its foundation and this merger enables us to become a global leader in sustainable material flow.
“Our customers are increasingly seeking green solutions and together we will have better opportunities to solve customers’ challenges.”
It is proposed that the future company’s board of directors will include four directors from Konecranes’ board and four from Cargotec’s, while Vitzthum will be company chairman.
The President and CEO of the future company will be appointed and announced at a later stage. The post-completion ownership in the future company corresponds to approximately a 50-50 split between Konecranes and Cargotec shareholders.
Cargotec will evaluate strategic alternatives for its ports and logistics software specialist Navis to support its future development, with new ownership structures and a potential sale of Navis software business under consideration.