Konecranes to buy Terex MHPS business as companies terminate agreement
Terex Corporation has said that it has agreed with Finnish company Konecranes to mutually terminate the Business Combination Agreement (BCA) the companies entered into on 10 August, 10, 2015, without payment of a fee by either party.
In connection with the termination of the BCA, Terex has signed a definitive agreement to sell its Material Handling and Port Solutions business (MHPS) to Konecranes for total consideration of approximately US$1.3 billion. The consideration being paid is comprised of $820 million in cash and 19.6 million newly-issued shares of Konecranes.
On completion of the transaction, Terex will own approximately 25% of the outstanding shares of Konecranes and have the right to nominate two directors. The transaction, which is subject to customary regulatory approvals and the approval of the shareholders of Konecranes, is expected to close in January 2017.
The agreement provides Terex with the ability to continue to pursue discussions with Zoomlion Heavy Industries Science & Technology.
Terex has the right to terminate the agreement on or before 31 May, 2016 for a fee of $37 million if Terex and Zoomlion agree on a sale of Terex as a whole.
“The sale of the MHPS business to Konecranes is good for our customers, team members and shareholders,” says John L. Garrison, Terex President and Chief Executive Officer.
“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.
“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.”