Demag Cranes management and supervisory boards have unanimously rejected Terex’s recent unsolicited tender offer of €41.75 per share to acquire the company’s stock. Demag chief executive Aloysius Rauen characterized the offer, tendered May 2, as inadequate “from a financial point of view for Demag shareholders and not in the interest of the company.”
Terex’s bid is valued at up to €884 million (about $U.S. 1.27 billion).
Despite its rejection of the bid, a Demag spokesman said the company would consider talks with the Westport, Conn.-based company, and entertain a higher offer. Terex chairman and CEO Ron DeFeo had previously stated that Terex had attempted to initiate acquisition talks but had been rebuffed.
Rauen said Terex’s offer failed to take into account the sales and profit expansion that Demag expects in the next few years. Demag, which makes cranes and hoists used in factories and warehouses as well as cargo at ports, predicts its annual revenue will reach €1.7 billion by fiscal year 2014-15, a greater than 80-percent increase compared with 2010. Demag is also expecting significant growth in developing countries such as China.
Demag said this week it is expecting an operating profit margin of about 6.4 percent for fiscal 2011, compared with 5.8 percent in 2010. It has revised its forecast for 2012 to €1.06 billion (about U.S. $152 billion), compared with an earlier target of €1.02 billion.
A potential acquisition of Demag would give Terex added scale in Europe and emerging markets such as China. Such an acquisition would give Terex greater strength in industrial cranes and hoists and make it the leading player worldwide in port equipment.