Terex Corp., a U.S. heavy-equipment manufacturer, made an 883.9 million-euro ($1.31 billion) takeover offer for Demag Cranes AG to expand in harbor cranes.
Terex, which has its headquarters in Westport, Connecticut, is bidding 41.75 euros for each share of Dusseldorf-based Demag Cranes, the U.S. company said today in a statement. The offer, which is 15 percent more than Demag’s closing price on April 29, requires acceptance from at least 51 percent of Demag Cranes shareholders, Terex said.
A takeover would be the material-handling industry’s largest in at least a decade. Terex is the latest suitor to pursue Demag, which rebuffed an approach in February by Finland’s Konecranes Oyj. Terex’s move may renew interest in Damag, the world’s largest maker of mobile harbor cranes, from European competitors such as Cargotec Oyj, said Gordon Schoenell, an analyst at Bankhaus Lampe in Dusseldorf.
“Konecranes may pull their plans for a takeover back out of the drawer, and Cargotec may also join in,” Schoenell said by phone. “The chances are high we may see a bidding war.” Schoenell recommends clients “hold” Demag stock and today raised his one-year share-price estimate to 45 euros from 36 euros.
Demag jumped 8.71 euros, or 24 percent, to 45 euros in Frankfurt trading, suggesting investors expect the offer price to rise. Before today, Demag’s stock was little changed this year.
Terex dropped 87 cents, or 2.5 percent, to $33.91 as of 4:15 p.m. in New York Stock Exchange composite trading.
“For investors who like to speculate on an improved takeover price, it could be worthwhile continuing holding the stock,” Thomas Wissler, a Frankfurt-based analyst at Hauck & Aufhaeuser who today cut his recommendation on Demag to “sell,” said in a report to clients.
Wissler, who has a share-price estimate of 37 euros on Demag, said he doesn’t expect Konecranes to make a counter-bid because of “severe antitrust issues.” Ulrich Scholz, an analyst at UniCredit SpA in Munich, said Konecranes may start a competing offer because regulatory questions would be “manageable.”
The proposed takeover by Terex would be the largest among 213 acquisitions involving material-handling companies announced in the past 10 years, according to data compiled by Bloomberg. Demag first sold stock to the public in 2006, and its biggest shareholder is Cevian Capital, a Swedish fund founded by activist investor Christer Gardell.
“We expect shareholders to be pleased by the offer,” said Alistair Hammond, a spokesman for Terex. He said the U.S. company’s management hadn’t contacted Demag’s boards about the offer before it was made.
Nikolai Juchem, a Demag spokesman, and Mikael Wegmuller, a spokesman at Hyvinkaa-based Konecranes, declined to comment.
Terex said Feb. 9 it had $1.4 billion at the end of 2010, consisting of $894.2 million in cash and a $503.4 million credit facility.
Demag’s earnings before interest and taxes, depreciation and amortization will rise 29 percent to 92.9 million euros in the fiscal year ending Sept. 30, according to the average of 15 analyst estimates compiled by Bloomberg. Global commerce will grow 6.5 percent this year after expanding a record 14.5 percent in 2010, the World Trade Organization said on April 7.
Demag is “highly complementary” to Terex’s operations, and a combined company would be a “leading worldwide player in port equipment” with a combined $5.8 billion in 2010 sales, the U.S. manufacturer said. The deal is “predicated upon growth and not cost reduction,” Terex Chief Executive Officer Ronald DeFeo said in the statement.
Terex is being advised by Goldman Sachs Group Inc., Commerzbank AG and Credit Suisse Group AG.