Zoomlion Shares Tumble After Sweetening Terex Offer

  • Zoomlion raised offer to $31 per share, up by $1 per share
  • Terex must pay $37 million if Konecranes tie-up is called off

Zoomlion Heavy Industry Science & Technology Co., a Chinese industrial machinery manufacturer, tumbled the most in more than eight months in Hong Kong trading after raising its offer to buy U.S. cranemaker Terex Corp.

The shares fell 8.2 percent to close at HK$2.91 in Hong Kong, the biggest single-day loss since July 8. Zoomlion’s Shenzhen-traded shares dropped 2.8 percent.

Terex Corp., which agreed last year to combine with a Finnish competitor, said Wednesday it will hold talks with Zoomlion after receiving an increased takeover bid from the Chinese suitor. The Westport, Connecticut-based company will determine whether it can obtain a binding proposal from Zoomlion, Terex said in a statement.

Zoomlion raised its cash offer to $31 a share, a dollar higher than an unsolicited bid it made in January, Terex said. Zoomlion made its revised and updated non-binding offer March 23 to Terex’s board of directors, the Hunan province-based company said in a Hong Kong exchange filing Thursday.

There’s no assurance a deal with Zoomlion can be reached and the Terex board hasn’t changed its recommendation in support of a proposed tie-up with Finland’s Konecranes Oyj, according to the statement. Terex can’t enter a deal with Zoomlion without terminating its agreement with Konecranes, the U.S. company said.

Konecranes will continue to pursue a merger with Terex because it represents a “highly compelling opportunity for both companies and their shareholders,” the Finnish company said in a statement Thursday.

Terex jumped 9.1 percent in late trading to $25.90 at 6:06 p.m. in New York. If the Konecranes agreement is broken, the company ending the deal must pay a termination fee of $37 million, according to a regulatory filing by Terex.

Zoomlion said in January it will “actively promote” the deal with Terex. The Chinese firm has secured funding support from banks and has informed the government about the possible transaction, it said.

Zoomlion is China’s second-biggest maker of construction equipment by revenue, trailing Sany Heavy Industry Co., data compiled by Bloomberg show. Zoomlion is based in the central Chinese city of Changsha, where late revolutionary leader Mao Zedong attended school.

— With assistance by Clement Tan

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