Out-going Terex chairman and CEO Ron DeFeo.

Out-going Terex chairman and CEO Ron DeFeo.

The boards of US-based construction equipment manufacturer Terex and Finnish industrial cranes maker Konecranes have agreed to an all-share “merger of equals”. The new entity, to be called Konecranes Terex , will have revenues of some US$ 10 billion and earnings before interest, tax, depreciation and amortisation (EBITDA) of US$ 845 million.

Following the deal, current Terex shareholders will own about 60% of the new company, while Konecranes’ owners will have 40%. Although in this sense Terex could be said to be the senior partner, the new company will be incorporated in Finland.

It said it would maintain “significant headquarters” at both companies’ present head offices - Westport, Connecticut, US and Hyvinkää, Finland. Shares are to be listed on the NASDAQ exchanges in both Helsinki, Finland and New York, US.

Upon completion of the transaction, Terex shareholders will own approximately 60% of the combined company and Konecranes shareholders will own approximately 40%. The Board will be composed of nine directors – five Terex nominees and four Konecranes representatives.

The CEO will be the Terex CEO, currently Ron DeFeo, who is also the company's chairman. However, his employment contract with Terex expires at the end of the year. The chair of the new entity will be the current chairman of Konecranes, Stig Gustavson.

Commenting on the deal, Mr DeFeo said, “This merger brings together two great businesses and through synergies provides another lever that is within our control to deliver value-creation to both the shareholders of Terex and Konecranes. We have a deep respect for Konecranes and look forward to joining forces with them to build a stronger and more diverse company that will be in an excellent position to succeed in a dynamic and highly competitive global industry.”

Mr Gustavson added, "The combination of Konecranes and Terex is a defining step in the history of both companies. With a focus on lifting and material handling solutions, Konecranes Terex will be in an excellent position to deliver enhanced growth in revenue and margins through several strategic advantages, including significant cross-selling opportunities. There is a common culture between the two organisations, with both companies having long histories of designing competitive and innovative solutions. Together, we will have the opportunity to expand what Konecranes and Terex have built and become even stronger in the future."

The merger is subject to regulatory and shareholder approval and is expected to close in the first half of 2016. The combined group will have some 32,000 employees worldwide.

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