30.05.2011

Demag looks set to reject Terex

It is almost certain that Demag Cranes will reject the unsolicited cash offer from Terex today and it looks unlikely that Terex will raise its bid.

The Terex offer does not close until the end of June, but Demag management have taken soundings from major shareholders and sough a ‘fairness opinion’ from investment bankers and seem satisfied that it has the support to reject the offer on the grounds that it understates the company’s worth.

At the same time Terex executives have restated chief executive Ron Defeo’s previous message that the company would not be drawn into a bidding war and would rather pass on the opportunity than pay more than it feels Demag is worth, which is the €41.75 a share that it has offered.

Assuming the Demag management team does formally reject the offer today, and pending any other developments, Terex is likely to sit and wait until the expiry date of its offer is up, before making another move of any kind.
Click here to see Terex launches Demag bid

Vertikal Comment

If this takeover bid ends on June 30th and just goes away it will be a very odd outcome for such a public offer. Terex would surely have been aware that Demag was likely to reject its first offer? It was also fairly predictable that a good number of shareholders would support the management's decision?

It is possible though that shareholders will continue to talk up the value of their shares in the expectation- or hope – that Kone or another bidder will appear with a higher offer? If they don’t materialise by the end of the third week of June, will they then take the Terex cash? It is unlikely but… possible. Does Terex have a better feel for Demag shareholders intentions than the management?

It will be an interesting month.