Terex Corp. this week announced that its German subsidiary Terex Industrial Holding AG, based in Dusseldorf, Germany, is making a voluntary cash public tender offer for the outstanding share capital of Demag Cranes AG at €41.75 per share (about U.S. $62). The proposed offer price represents a premium of about 41 percent to the previous share price before speculation regarding possible takeover interest in Demag in October 2010, and a premium of 15 percent to the April 29 closing price of €36.30.
Demag is a leading provider of industrial cranes, crane components, harbor cranes and port automation technology. Its business is complementary to the existing Terex business, and the combined entity would have had total revenues of about $5.8 billion in 2010, with a strong footprint in Europe and emerging markets such as China.
“Demag is a leader in industrial cranes and port technology, and our companies are highly complementary,” said Ron DeFeo, Terex chairman and CEO. “Demag products are competitive and innovative. The company is professionally managed, with highly motivated staff, and Terex will draw on this for both Demag’s ongoing success and the future of Terex as a whole. Terex intends to build on the strong brand and service franchise of Demag in Germany and abroad. This transaction is predicated upon growth and not cost reduction.”
Germany is already a strong market for Terex. Over the past 10 years, Terex has acquired four significant German businesses, including Demag’s former sister company, Demag Mobile Cranes, in 2002. DMC’s revenues have more than doubled since being acquired by Terex. Germany is currently Terex’s second-largest market and production base, and about 22 percent of Terex’s global employee base is in Germany.
Terex will finance the total offer consideration of €884 million (about U.S. $1.3 billion) from its existing cash and an already committed debt financing. The tender offer will carry a minimum acceptance level condition of not less than 51 percent of all Demag shares outstanding.
Demag’s share price rose 22 percent May 2 in response to the Terex bid. Demag officials have not commented other than to say they have seen the offer.
