In what both companies called a merger of equals, Terex Corp. has announced a merger with crane manufacturer Konecranes Plc, based in Hyvinkää, Finland. The companies said their respective boards of directors have unanimously approved a definitive business combination agreement and merger of equals.
Konecranes and Terex will combine to create a single company with estimated pro forma 2014 revenues of $10 billion and $845 million in EBITDA. Terex shareholders will own about 60 percent of the combined company and Konecranes shareholders will own approximately 40 percent. The new company will be named Konecranes Terex Plc and will be incorporated in Finland.
Terex said the combined company will create increased global scale with enhanced competitiveness to rival low-cost emerging market players, as well as broader presence in key sectors with greater opportunity to capitalize on growth trends in the port and industrial sectors.
“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,” said Ron DeFeo, Terex CEO. “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. There is a common culture between the two organizations, with both companies having long histories of designing competitive and innovative solutions.”
The transaction is subject to approval by Terex and Konecranes shareholders, regulatory approvals and customer closing conditions, with closing expected during the first half of 2016.
Upon closing, the combined company will appoint nine directors: five Terex directors and four Konecranes directors. The combined firm will maintain its Westport, Conn., and Hyvinkää, Finland, headquarters, and will be listed on Nasdaq Helsinki as well as the New York Stock Exchange.
The companies expect to achieve €110 million (about U.S. $121 million) in annual cost savings.
Konecranes primarily provides cranes, hoists and other lifting equipment to customers in the shipping, automobile and energy industries. Terex reported revenues of about $7.3 billion in revenues in 2014, while Konecranes posted sales of €2.01 billion (about U.S. $2.2 billion).
Gustavson will serve as chairman of the combined firm, with DeFeo as CEO.
According to a Seattle Times report, the merger comes in response to a slowing in demand for lifting equipment, as well as heightened competition from Chinese manufacturers that have increased capacity and expanded internationally as a result of slowing markets in China. Terex has already played a role in consolidation in the crane industry with the acquisition of German cranemaker Demag Cranes in 2011.