Terex Corp. has asked Chinese manufacturer Zoomlion to sweeten its $3.3 billion offer if it wants Terex to walk away from its merger agreement with Finland’s Konecranes, according to a Reuters report. Although Terex had temporarily put a hold on integration plans it had begun with Konecranes while it continued to talk with Zoomlion and consider its offer, the news, citing unnamed sources, suggests the offer needs to be higher for Terex to abandon the agreement it had already made with the Finnish crane manufacturer.
The Reuters report said that Terex has argued privately that the synergies with Konecranes in the material handling and ports systems businesses of the two companies are of greater long-term value than the $30 per share cash offer Zoomlion offered, the sources said this week. While Terex has not said exactly what its price would be to justify breaking up the Konecranes merger, Zoomlion has not publicly shown willingness to increase its offer.
Konecranes has offered 0.8 of its shares for each Terex share, and has argued that a merger of the two companies would strengthen their ability to deal with a cyclical downturn in their industries, preparing shareholders for strong benefits in an upturn.
Neither Zoomlion nor Terex have expressed concerns about a possible Committee on Foreign Investment in the United States opposition to a Zoomlion-Terex merger. Last week U.S. Representative Duncan Hunter, a member of the House Committee on Armed Services raised concerns because of Zoomlion’s longtime association with China’s People's Liberation Army. Potential CFIUS scrunity of a deal have been mentioned because of Terex’s 97 contracts with the U.S. government and port-related contracts. However, the value of Terex’s priority-rated government contracts is said to be small and not material to Terex’s business.
Also this week Konecranes said it still expects its merger with Terex to go through despite the Zoomlion offer, although it might take longer than previously planned.
