09.05.2011

Demag investor dismisses Terex offer

Demag’s largest single shareholder Cevian Capital has dismissed the Terex offer for the company of €41.75 a share, as “completely inadequate”.

Swedish based Cevian currently holds around 10 percent of the German crane maker’s equity and has a seat on the supervisory board. It is also open to the idea of increasing its shareholding sometime in the future. However it says that it does not plan to acquire a blocking minority.

In a statement to the press Cevian said that it “pursues a strategy of industrial value enhancement and is convinced of the innovation and technological leadership of the Demag Cranes Group and believes in the continued success of its strong Demag and Gottwald brands.”

It adds that the current valuation does not reflect the actual fundamental value of Demag Cranes.

Jens Tischendorf, a partner at Cevian Capital responsible for the business in Germany added: “The Management of Demag Cranes responded quickly and resolutely to the economic and financial crisis, laying the foundations for strengthening the competitiveness of the Company. We are convinced that the management board is following the right path.”

Vertikal Comment

Cevian along with a few UK based hedge funds, control around a third of Demag’s equity and will therefore be critical for Terex to win over. The group will of course be looking to talk up the Terex price, while hoping that someone else such as Kone or Cargotec join in.

Cevian’s reaction will of course guide other, smaller investors so Terex can expect to pay a fair bit more if it is to be successful. The big question is how much more?

Watch this space