Terex to offer for Demag

By Alex Dahm02 May 2011

Terex Corporation's German subsidiary, Terex Industrial Holding AG will make a voluntary cash public tender offer for the outstanding share capital of industrial and port crane manufacturer Demag Cranes AG.

The offer price is Euro 41.75 per share. It represents a premium of about 41% on the share price back in October before there were rumours about a takeover. It is a premium of 15% over the closing price on 29 April 2011 of Euro 36.30.

Terex said Demag's business is highly complementary to its existing business, and that "the combination has compelling industrial logic." Total revenue (on 2010 numbers) would be about US$ 5.8 billion.

"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," said Ronald DeFeo, Terex chairman and chief executive officer. "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," DeFeo continued.

Germany is already a strong market for Terex. Over the last ten years it has acquired four German businesses, including Demag's former sister company Demag Mobile Cranes, in 2002.

Terex will be financing the total offer consideration of EUR 884 million from its existing cash and an already committed debt financing. The tender offer will carry a minimum acceptance level condition of not less than 51% of all Demag shares outstanding, Terex said.

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