First Quarter Losses for Zoomlion Raise Questions About Terex Acquisition
Zoomlion posted a first quarter loss of 660.3 million yuan renminbi (about U.S. $101.5 mlllion), causing some analysts to express doubts regarding Zoomlion’s ability to finance its bid to acquire Terex Corp. for $3.4 billion. With Chinese equipment manufacturers facing a glut of unsold equipment and soft earnings, prospects over a potential acquisition of Terex appear to have clouded.
Earlier this month, Zoomlion sought to provide assurances to Terex regarding its offer, people familiar with the matter told Reuters, saying it would cover the risk of the acquisition being approved by the Chinese authorities. One Chinese analyst, Xu Mingle of BOC International, was quoted by Reuters as saying: "It's possible that the results will affect the Terex deal," while another analyst, John Hu of Morningstar, said: “"I think Zoomlion's management should reconsider the Terex deal as its Q1 earnings hit a record low. Is it worth spending so much money on Terex?"
With the Chinese market struggling, Zoomlion is apparently attracted to the access to the North American market that Terex would provide.
Zoomlion earlier this year made an unsolicited bid to acquire Westport, Conn.-based Terex Corp., which put merger efforts with Finland’s Konecranes on hold while it worked on negotiating a deal with Zoomlion. Negotiations between Zoomlion and Terex are continuing.
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.