Konecranes has signed an agreement (the ‘Stock and Asset Purchase Agreement’) to acquire from Terex Corporation its Material Handling & Port Solutions (MHPS) segment (the ‘Acquisition’) against consideration, consisting of cash and shares and to terminate the previously announced business combination agreement.
The acquisition against case and shares is valued at more than US$1.2 billion.
Terex will receive $820 million in cash and 19.6 million newly issued Konecranes class B shares, making Terex a 25% shareholder (calculated from shares outstanding on April 30, 2016).
The class B Shares to be issued to Terex will be created through an amendment to Konecranes' Articles of Association and will have the same financial rights as Konecranes ordinary shares but are subject to voting and transfer restrictions, as well as differing Board nomination rights.
The acquisition of MHPS will improve Konecranes’ position as a focused global leader in the Industrial Lifting & Port Solutions market.
Based on 2015 financials, Konecranes and MHPS had aggregated sales of more than US$3.9 billion, and a total workforce of approximately 19,000.
The Stock and Asset Purchase Agreement may be terminated by Terex prior to May 31, 2016, if it enters into, or reasonably believes that it will promptly enter into a legally binding merger agreement with Zoomlion Heavy Industries Science & Technology Co., Ltd., in which case, it will compensate Konecranes with a termination fee of $37 million.
The Acquisition will bring together a range of leading brands and offer significant industrial and operational synergies targeted at more than $158 million p.a. at earnings before interest and tax level within three years from closing.
Konecranes is prepared to deliver expected synergies on an accelerated timeline based on its in-depth review of the synergy opportunity and the extensive integration planning work carried out jointly with Terex over recent months.
Pursuant to the SHA and changed articles of association, Terex will be entitled to nominate up to two members to the Board of Directors of Konecranes as long as Terex’s or its group companies' shareholding in Konecranes exceeds certain agreed thresholds.
Terex's initial Board nominees will be David Sachs and Oren Shaffer as of closing of the Acquisition.
The acquisition is subject to regulatory approvals and other closing conditions, including shareholder approval at a Konecranes Extraordinary General Meeting of shareholders, and is expected to close in early of 2017.
If the Konecranes shareholder approval is not obtained, Konecranes will be required to compensate Terex's transaction expenses up to $20 million.
Christoph Vitzthum, Chairman of the Board of Konecranes, said: “For Konecranes, this acquisition is a milestone in building our future. The acquisition makes it possible for us to realise a long list of synergies and we expect it to create substantial value for our customers and shareholders.”
Panu Routila, President and CEO of Konecranes, said: “This acquisition will prove crucial to improving our position as a global partner in services, industrial lifting and port solutions, and at the same time create significant value for our owners.
“The combination of our businesses brings together a family of leading brands that will provide an excellent platform for further sustained growth, opens new growth opportunities in the service business and creates critical mass for future technology development.
“Furthermore, the acquisition allows us to combine the outstanding talent and best practices that each of Konecranes and MHPS have to offer. We already have extensive experience in maintaining Terex MHPS equipment, and are convinced that the complementary range of equipment and differences in geographical footprint will make Konecranes and MHPS an ideal match.”
Fact File: Terex MHPS is a leading supplier of industrial cranes, crane components and services under the Demag brand, as well as port technology with a broad range of manual, semi-automated and automated solutions under several brands such as Gottwald. Customers use these products for lifting and material handling in manufacturing and at port and rail facilities. Terex MHPS has manufacturing operations in 16 countries on five continents and operates a sales and service network in more than 60 countries. It has a 50% interest in a Singapore-based joint venture that manufactures industrial cranes in eight locations around the world. Terex MHPS is one of the five segments of Terex Corporation.