Terex’s future remains uncertain as Zoomlion reiterated its intention to proceed with its $30-per-share offer to acquire the Westport, Conn.-based company, an offer estimated at $3.3 billion. Meanwhile a Reuters report said that although Terex has not made a decision on whether or not to accept the Chinese construction manufacturer’s offer, according to sources close to the situation Terex has stopped work on its looming integration with Finnish cranemaker Konecranes.
Terex announced its intention to merge with Konecranes in November and was working towards an integration of the two firms until Zoomlion came forward recently with its unsolicited bid to acquire Terex at a considerably higher price. Terex agreed to consider the Zoomlion offer as a duty to its shareholders. If Terex accepts the Zoomlion bid and abandons the planned merger with Konecranes it will be obligated to pay the Finnish company about $37 million.
One potential complication to a possible Zoomlion-Terex merger is the potential of U.S. government opposition because of Terex’s contracts at U.S. ports and its U.S. government contracts. Although analysts have mixed opinions about the likelihood that the Committee on Foreign Investment in the United States would block a potential deal, a research report from J.P. Morgan North America Equity Research states the risk is small.
“Two percent of Terex revenue is directly leveraged to [North American] port crane equipment, which we believe would be hard to define as ‘critical infrastructure’, especially in light of the fact that the business is primarily hardware, not software monitoring a port,” the report said. “Additionally, Terex does sell equipment that is used by government entities, but this would not likely constitute a risk to national security since most of this equipment would be sold through distribution.”
The fact that the province of Hunan and Hony Capital, together with Zoomlion management, own about 30 percent of Zoomlion’s shares , could be a concern to U.S. officials, according to some sources.
