Terex sells MHPS to Konecranes, merger terminated

Following much speculation Terex Corporation and Konecranes have terminated their merger agreement from last year. At the same time Terex has agreed to sell its Materials Handling and Port Solutions (MHPS) business to Konecranes for US$1.3 billion.

They have agreed “to mutually terminate the Business Combination Agreement (“BCA”) the companies entered into on August 10, 2015, without payment of a fee by either party,” Terex said.

The MHPS deal will be $820 million in cash and 19.6 million new-issue Konecranes shares, giving Terex around 25 % of Konecranes and the right to nominate two directors. Pending regulatory and shareholder approval the deal is expected to close in January 2017, Terex said.

Discussions between Terex and Zoomlion for the takeover of the former by the latter can continue. Terex can terminate the Konecranes deal before 31 May 2016 at a cost of $37 million, if a takeover of all of Terex is agreed with Zoomlion.

John Garrison, Terex president and chief executive officer, said, “This transaction is expected to be accretive to Terex earnings per share and preserves the strategic logic for the original merger of equals. In addition, it will significantly reduce Terex’s debt levels, improves our balance sheet and gives us longer term financial flexibility to invest in our business and buy back shares. As a 25 % shareholder of Konecranes, Terex will also be able to share in the dividends, synergies and economic upside of the combined business.”

Garrison continued, “This new transaction structure offers other substantial benefits to Terex shareholders as well. Importantly, the transaction locks in the benefits of the MHPS sale while preserving the ability for Terex to continue discussions with Zoomlion on a potential sale of the company at $31 per share with the MHPS business or, alternatively, for the sale of Terex without the MHPS business.”