Cranes makers Terex (TEX) and Konecranes (KNCRY) , of Finland, have torn up a 1.8 billion ($2.2 billion) merger agreement struck last August in favor of an asset sale which leaves the door open for China’s Zoomlion to bid for the Westport, Conn. company.
The new arrangement involves the sale of Terex’s material handling and port solutions business to Konecranes for $1.3 billion, the U.S. company said. The price includes $820 million in cash and new shares equivalent to a 25% Konecranes stake, accompanied by the right for Terex to nominate two Konecranes directors.
The deal between the two companies also allows Terex to continue talks with Zoomlion about a full takeover for the next two weeks. It would pay its Finnish deal partner $37 million if it decided to scrap the material handling transaction by May 31.
In a statement Terex president and CEO John L. Garrison said the new transaction “locks in the benefits of the MHPS sale while preserving the ability for Terex to continue discussions with Zoomlion on a potential sale of the company at $31 per share with the MHPS business or, alternatively, for the sale of Terex without the MHPS business.”
He said the sale of the unit to Konecranes “is expected to be accretive to Terex earnings per share and preserves the strategic logic for the original merger of equals. In addition, it will significantly reduce Terex’s debt levels, improves our balance sheet and gives us longer term financial flexibility to invest in our business and buy back shares.”