Terex merger partner Konecranes plans efficiency savings

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Finnish port crane manufacturer Konecranes, which plans to merge with Terex Corporation, said it will make annual cost savings of €25 million by the end of 2017.

The company said that while merger talks with US manufacturer Terex continue, it needs to make efficiency savings. Around half of the savings will happen before the end of this year, according to a written statement.

Plant down-sizing and closures are a possibility, as well as some streamlining of its product portfolio and its supply chain.

Konecranes is based in Hyvinkää, a town of 46,000 people about 50km north of the capital Helsinki. In 2015, group sales were just over €2.1 billion. It has 11,900 employees at 600 locations in 48 countries.

“While we are proceeding with the planning of the merger with Terex Corporation, we are actively seeking opportunities to improve our operational efficiency in a marketplace where several of our end-markets are facing macro-related headwinds,” said Konecranes president and chief executive Panu Routila.

“The intended actions are necessary and independent of the announced merger with Terex. The execution of these actions will strengthen the foundation of our business in the years ahead.”

Terex and Konecranes unveiled their merger in August. The deal is expected to create a company with a combined market value of $5.7 billion and annual sales of over $10 billion. Terex shareholders would own 60% while Konecranes shareholders would hold 40%. Stig Gustavson, chairman of Konecranes, would have the same role within the enlarged group.

Meanwhile, Terex itself remains in merger talks with Zoomlion Heavy Industry Science & Technology after the Chinese company’s unsolicited takeover bid of US$3.28 billion last month. Zoomlion offered $30 a share, around double at which Terex shares were trading.

The talks are, however, non-binding, according to statements from both companies.

US-based Terex manufactures aerial work platforms, construction cranes, material handling & port solutions and materials processing equipment.

In China, Zoomlion is third behind XCMG and Sany in annual revenue, with sales of around $4.4 billion in 2015. Terex’s revenue was $7.3 billion.

The acquisitive Zoomlion acquired UK-based Powermole in 2003 and Italian concrete pump manufacturer Cifa in 2008. Zoomlion stands to gain Terex’s factories in England and Northern Ireland where Terex subsidiaries Powerscreen and Terex Finlay are based. Zoomlion would also pick up the Genie aerial work platform business and Demag cranes.

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