Konecranes Oyj shares soared after the crane maker agreed to buy a lifting-gear business from Terex Corp. for about $1.3 billion, abandoning a full merger plan and paving the way for China’s Zoomlion Heavy Industry Science & Technology Co. to buy the rest of the U.S. company.
Konecranes will pay $820 million in cash and 19.6 million shares for Terex’s material-handling and ports-solutions division. It’s targeting savings of €140 million ($158 million) from a three-year integration program, the Hyvinkaa, Finland-based company said in a statement on Monday.
The decision to buy only part of Terex marks the end of a proposed full merger with Konecranes that had been in the works since August 2015. That deal was thrown in doubt when China’s Zoomlion unexpectedly emerged as a rival suitor for Terex in January. The bidding war escalated in March, when Terex said it will hold talks with the Chinese industrial machinery manufacturer after receiving an increased offer.
“This acquisition will prove crucial to improving our position,” Panu Routila, chief executive officer of Konecranes, said in the statement, adding that the businesses are a “perfect fit.”
Terex will continue to pursue discussions with Zoomlion, it said.
Zoomlion is interested in buying the rest of Westport, Connecticut-based Terex, which includes construction equipment and rock-crushing machines, and that transaction could face less risk of being rejected by U.S. officials if it excludes the MHPS division, according to people familiar with the situation. The Chinese company would also have the option of still pursuing a full takeover of Terex, which could leave the Finnish firm empty-handed except for a $37 million breakup fee.
A smaller deal would also make it easier for Zoomlion to gain approval from the Chinese currency regulator to move the acquisition funds offshore.