Terex Corporation is launching an unsolicited bid for outstanding shares of Germany’s Demag Cranes AG, taking its $1.3-billion offer to shareholders because it has failed to negotiate a takeover after more than a year of offers. Demag Cranes has resisted the efforts at consolidation, but in the process it has drawn interest also from Finland’s Konecranes. Reports suggest a bidding war may develop. ”
Connecticut-based Terex indicates it will seek at least 51% control of Demag in any deal. A purchase would be funded from cash reserves and committed debt issues. ”
Such a merger would capitalize on the sustained expansion in global industrial activity, and create a new giant in the global shipping and transport sectors. Last year Terex earned $1 billion for selling its mining/construction equipment business to Bucyrus International (which subsequently was acquired by Caterpillar) and it bought Fantuzzi Industries, an Italian crane builder. ”
Terex has four business segments now: Aerial Work Platforms, Construction, Cranes, and Materials Processing, with 2010 net sales of $4.4 billion and 16,300 employees worldwide. Demag builds industrial cranes, crane components, harbor cranes, and port automation technology. Terex claims their businesses are “highly complimentary,” with combined 2010 revenues of about $5.8 billion and a strong presence in Europe and China. ”
“Demag is a leader in industrial cranes and port technology, and our companies are highly complementary. By combining our businesses, we would add a new product category of industrial cranes and hoists, and create the leading worldwide player in port equipment,” according to Terex chairman and CEO Ronald M. DeFeo. “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.”
News reports indicate that Demag's shareholders have urged the company to engage potential suitors in merger talks, but the board maintains that no moves are pending.