Terex Talks Continue with Zoomlion Despite Potential U.S. Government Opposition
Terex Corp. is continuing discussions with China’s Zoomlion despite concerns that a transaction could be blocked by the Committee on Foreign Investment in the United States (CFIUS), according to a Reuters report.
CFIUS, a U.S. government agency that looks at deals that could pose potential security threats, has demonstrated concern regarding Chinese investments. It recently forced Phillips to abandon a $3.3 billion sale of its lighting business to a group backed by Chinese investors. Because Terex has priority-rated contracts with the U.S. government, an acquisition from a Chinese company could invite attention, as could the fact that Terex manufactures mobile cranes used in ports that are viewed as a critical part of U.S. infrastructure. Already a Chinese company Zhenua Port Machinery is operating in U.S. ports.
While Terex’s board has not said that it would abandon an agreed-upon merger with Finland’s Konecranes in favor of Zoomlion’s $3.3 billion unsolicited offer, it has not expressed concern about potential CFIUS attention. Terex has not commented on a potential deal with Zoonlion except to acknowledge that its board is discussing the proposal.
Port equipment made up about 11 percent of Terex sales, according to the company’s latest annual report.
Zoomlion offered $30 per share in cash for Terex, considerably more than Konecranes’ offer. Terex would have to pay Konecranes a $37 million termination fee under its merger agreement should its board change its recommendation on the transaction.
According to the Reuters report, Zoomlion could seek backing from the Chinese government to help finance a deal for Terex, which would likely increase CFIUS scrutiny. Zoomlion is partly owned by China’s Hunan province.
Terex's stock closed at $22.40, more than 40 percent higher than before the Zoomlion bid was announced.
To read Reuters’ full article, click on: http://www.reuters.com/article/us-terex-m-a-zoomlion-idUSKCN0V71NW
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.