Terex Completes Sale of Material Handling and Port Business to Konecranes
Terex Corporation has completed the sale of its Material Handling and Port Solutions business to Konecranes Plc for $595 million and €200 million in cash and 19.6 million newly issued class B shares, representing a 25% interest in Konecranes.
“We believe that the Konecranes-MHPS combination represents compelling industrial logic that will deliver significant value to Konecranes customers, team members and shareholders, including Terex” said John Garrison, Terex president and CEO.
Garrison said the sale is a major milestone in the company’s plan to become a more focused, high performance enterprise. “We are committed to delivering improved profitability and return on capital across Terex as we implement our strategy of focus, simplify, and execute to win,” he said. “Also, we will move forward over the coming weeks with our planned debt reduction, significantly reducing our interest expense and leverage as we enter 2017.”
The final transaction consideration is subject to post-closing adjustments for cash, debt, working capital, MHPS actual 2016 EBITDA, and the closing of the sale of the Stahl CraneSystems business.
Konecranes reported that the MHPS acquisition will improve its position as a global leader in the industrial lifting and port solutions market. It expects to achieve substantial growth opportunities in the service business, as well as critical scale for further technological development.
Panu Routila, president and CEO of Konecranes, said: “We want to provide a home for Demag and Port Solutions, from which these businesses can grow and become stronger as part of our joint organization. The MHPS acquisition makes it possible for us to realize a long list of synergies. We will be one technology company, ready to create the next generation of lifting.”
Konecranes is prepared to deliver expected synergies based on the integration planning work carried out jointly with Terex over recent months. Of the total of EUR 140 million p.a. synergies targeted within three years, EUR 35 million is expected to be implemented within 12 months from January 1, 2017, from which date the MHPS Acquisition is deemed effective from a financial point of view. Overall, synergies will come from procurement, operations, and SG&A.
One-time implementation expenses are expected to be EUR 130 million, with EUR 60 million of capex expected. In addition, dynamic synergies related to new opportunities in global service operations are expected to lead to significant earnings growth.