RERMAG

Demag Cranes’ Board Accepts Terex’s Increased Bid

After weeks of rejection, Terex Corp. increased its offer to acquire Demag Cranes from €41.75 per share to €45.50 per share, resulting in a unanimous acceptance of the offer by Demag’s board. The two companies have entered into a business combination agreement that confirms Terex’s support for Demag’s strategy and accepts its workforce as part of the Terex group.

Both the management and supervisory boards publicly announced they will recommend that the Demag Cranes shareholders accept the offer, which carries a minimum acceptance threshold of 51 percent of all Demag shares. The offer still has a deadline of June 30.

The increased price, about U.S. $1.3 billion, represents a premium of 29.3-percent more than the three-month weighted average share price of Demag before the announcement of the tender offer. It also represents a 53-percent premium to Demag’s share price of €29.65 on Oct. 6, 2010, the last trading day before speculation began regarding Terex’s possible takeover interest in the Germany-based cranemaker. And the offer is a 9-percent increase compared with Terex’s initial bid.

If finalized, the combined entity would have a strong footprint in Europe and emerging markets, especially China. Demag expects sales of €1.06 million (about U.S. $1.5 million) in 2011, while Terex expects $5 billion to $5.4 billion. Combined the company would post 2011 sales of between $6.5 billion and $7 billion.

“We are pleased to have reached an agreement with the management of Demag Cranes that provides an excellent basis for the future joint success of Terex and Demag Cranes,” said Terex chairman and CEO Ron DeFeo. “Our businesses are highly complementary, and the combination has compelling industrial logic for all of our collective stakeholders. Demag Cranes products are competitive and innovative. The company is professionally managed, with highly motivated staff, and Terex will draw on this for both Demag Cranes’ ongoing success and the future of Terex as a whole. We look forward to capitalizing upon our strengths and working with Demag Cranes’ management and employees to continue to grow the business globally.”

Under the business combination agreement, Demag will remain as an independent operating segment within Terex pursuing its existing business activities and continue to be based in Dusseldorf. Strategic and operational responsibility for Demag’s business will remain with its management board. After the proposed takeover, Demag will be represented by its CEO in Terex’s executive leadership team. In addition to Demag management board’s plan to develop the company’s mid-market segment, Terex will support Demag’s further expansion in emerging markets, including a potential strategic alliance between Demag and Weihua in China, a manufacturer of industrial and harbor cranes. Demag had signed a letter of intent for a majority interest in Weihua in January.

Demag was also approached about a possible acquisition by Finland’s Konecranes Oyj in February.

The total increased purchase price is about U.S. $1.4 billion. Top shareholder Cevian, an investment firm that had rejected Terex’s earlier takeover bid, is believed to support the new offer since the company has a seat on Demag’s advisory board.

Terex Corp. is based in Westport, Conn.

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