Terex and Zoomlion have terminated their discussions regarding a possible Zoomlion acquisition of Terex Corp., both companies said. Terex also said that the sale of its Material Handling and Port Solutions business to Konecranes will proceed as planned.
“The board of directors and management of Terex worked diligently to determine if an appropriate transaction with Zoomlion, beneficial to Terex shareholders, was achievable,” said David Sachs, chairman of the board of Terex. “Unfortunately, after many months of discussions, Zoomlion was unable to provide a fully financed, binding proposal for the purchase of Terex with or without MHPS. This ends the prolonged period of uncertainty that this process has brought to Terex and its customers, team members and shareholders.”
Terex and Konecranes, a Finnish company, announced in August of last year that they would merge in an all-share deal. However, in January China-based Zoomlion launched an unsolicited bid to acquire Terex for $30 per share in cash, or about $3.3 billion. When Terex sought a higher premium, Zoomlion upped its offer to $31 per share in March. Terex asked for a binding proposal; however, according to sources close to the situation, the Chinese firm was unable to secure the funding in time for the May 31 deadline that Terex sought. Earlier this month Konecranes abandoned its effort to merge with Terex in its entirety, but agreed to acquire the MHPS segment, which had interested it the most.
After the deal with Konecranes was re-structured, analysts said that the deal for the MHPS unit would enable Terex to continue discussions with Zoomlion with less concern for regulatory opposition to a transaction with a Chinese company since Terex did business at United States ports. However, the deal would not be finalized.
Zoomlion stated today that no agreement could be reached “on the crucial terms” although it didn’t state what those terms were.
“Although the parties to the transaction have made their joint efforts to closely negotiate on the proposed transaction recently, no agreement can be reached on the crucial terms,” said the Zoomlion statement. “The company therefore decided to terminate the negotiation in relation to the proposed acquisition of Terex. The company will continue to seek strategic opportunities for its long-term development, and further procure its strategic transformation and industrial upgrading.”
Terex, which closed Thursday at $24.33 per share dropped in overnight trading to $19.90, an 18.2-percent decline, but made a partial recovery by the close of trading Friday to $20.89.
“The sale of the MHPS business to Konecranes will now proceed,” said Terex president and CEO John Garrison. “This transaction represents excellent value realization for our shareholders and also provides certainty for our MHPS customers and team members. We expect this sale to be accretive to Terex’s earnings per share. The proceeds will significantly reduce Terex’s debt levels and improve our balance sheet, providing us with the ability to buy back shares and invest in our remaining businesses. As a 25-percent shareholder of Konecranes, Terex will be able to share in the synergies and economic upside of the combined MHPS and Konecranes businesses.”
The sale of the MHPS segment of its business for approximately $1.3 billion is subject to customary regulatory approvals and is expected to close in January 2017.
