China's Zoomlion sweetens bid for US crane maker Terex Corp to $3.4 bn

16 Mar 2016

China's Zoomlion Heavy Industry Science and Technology Co has raised its offer for US crane maker Terex Corp to over $3.4 billion, Reuters yesterday reported, citing people familiar with the matter.

Zoomlion had last month offered to pay $30 per share, a 47-per cent premium to Terex's 16 February closing price (See: China's Zoomlion offers to buy US crane maker Terex for $3 bn)

Zoomlion has sweetened its offer by adding a special dividend for Terex shareholders of $1 per share, taking the deal value to more than $3.4 billion.

Terex is seeking Zoomlion to make an offer of $32.75 per share in cash in order to terminate its previously agreed merger with Finland-based Konecranes, the report said.

Konecranes had last August agreed to buy Terex in an all share merger deal. Konecranes had offered 0.80 of its shares for each existing Terex share in order to create a $10 billion company.

It appears that Zoomlion's main problem in agreeing to a deal with Terex is price, rather than concerns that the US government could block the deal because of Terex's ties to the US military and presence in US ports, the report said.

Zoomlion's bankers who are funding the deal, including China Development Bank and the Export-Import Bank of China, are waiting for Terex to provide access to the due diligence report in order to finalize their financing commitments, the report added.

Zoomlion believes the deal offers strategic benefits to both companies since Terex's main products are aerial work platforms, cranes and material handling equipment, while its main products include construction machinery, environmental equipment and agricultural machinery.

Terex's market is mainly concentrated in the US and the European markets, while Zoomlion's presence is mainly in China and the emerging markets.

Post closing, the merged company will have a more comprehensive product chain and a global footprint.

Terex possesses advanced manufacturing knowhow and technology, whereas Zoomlion has abundant production capacity and manufacturing cost advantages.

The merged company will be able to realize production capacity synergies and optimize finance costs.

Terex is a lifting and material handling solutions company reporting in five business segments - aerial work platforms, construction, cranes, material handling & port solutions and materials processing.

It manufactures a broad range of equipment for use in various industries, including the construction, infrastructure, manufacturing, shipping, transportation, refining, energy, utility, quarrying and mining industries.

It also provides financial products and services to assist in buying its equipment through Terex Financial Services.

Founded in 1992 and based in Hunan, Zoomlion manufactures high-tech equipment in the areas of agricultural, building, energy, environmental, and transport engineering.

The company has independent intellectual property rights in 11 major categories and 51 product lines, as well as nearly 1200 leading products.

Its subsidiaries include Italian construction equipment maker Compagnia Italiana Forme Acciaio SpA and British construction equipment manufacturer Powermole.

With annual revenues of nearly $4.2 billion, Zoomlion is the largest equipment manufacturing company in China and sixth largest in the world.

But any deal with a Chinese company would need the approval from the Committee on Foreign Investment in the United States.

Terex provides mobile harbor cranes in US ports that are seen as a critical part of the country's infrastructure, but Reuters had earlier said that Terex has government contracts that are small and may not be of material to Terex's business.