Tuesday, December 14, 2021

Two Material Handling Giants Argue the Case for a Merger

Proposals Put to Competition Authorities
Shipping News Feature

FINLAND – EUROPE – WORLDWIDE – Two of the biggest names in materials handling, Cargotec which was formed in 2005 from the split up of the Kone Corporation, and Konecranes, which originated in the same stable, are continuing their fight to be allowed to merge.

Both outfits are Finnish based, Cargotec produces the Kalmar range of fork trucks and associated equipment whilst Konecranes is probably better known for its port cranes and heavy lift and bulk materials handlers.

The deal to merge has been halted by competition authorities, particularly the European Commission which has now resulted in the pair submitting proposals to the EC comprising a commitment to divest Konecranes Lift Truck business and Cargotec's Kalmar Automation Solutions. These moves are intended to eliminate overlaps between the parties Container Handling Equipment businesses but allow the newly combined company to continue in the field of container handling equipment.

If acceptable, the merger would proceed comprising of Konecranes’ Industrial Equipment and Service businesses as currently operated, Cargotec’s MacGregor and Hiab businesses as currently operated, as well as the operations of Konecranes’ Port Solutions and Cargotec’s Kalmar businesses, other than the areas subject to remedy discussions.

The final decision on possible divestment of any businesses as well as possible terms and conditions will be confirmed only after the EC’s review and market testing process, as well as further proceedings with other competent authorities. The possible divestments are further subject to various local legal requirements. Cargotec and Konecranes have started an assessment of possible external buyers in order to identify the best alternatives to satisfy the authorities requests and to support the future development of these businesses.

The pair say further announcements on the approval processes will be made in due course once decisions on possible material approval conditions and possible divestitures are made, however they are confident that the merger will be completed by the end of H1/2022. Until all merger closing conditions are met and the transaction completed, both companies will continue to operate fully separately and independently.