16.06.2011

Terex ups its offer for Demag

Terex has done what it said it wouldn’t and increased its takeover offer for Demag the industrial and port crane company. It now looks set to succeed in its bid to acquire the German based manufacturer at €45.5 a share.

We understand that the increased offer has been unanimously approved and will be recommended by Demag’s supervisory board.Terex has also approved a business combination agreement that confirms Terex’s support for Demag’s strategy and its workforce as a part of the Terex group.

Terex had offered €41.75 a share and was adamant that it would walk away if it was not accepted. It was looking increasingly likely that a majority of Demag shareholders would not agree, with several major stock holders dismissing it as derisory.

Terex chief executive Ron DeFeo said: “We are pleased to have reached an agreement with the management of Demag Cranes that provides an excellent basis for the future joint success of Terex and Demag Cranes. Our businesses are highly complementary and the combination has compelling industrial logic for all of our collective stakeholders."

"Demag Cranes products are competitive and innovative. The company is professionally managed, with highly motivated staff, and Terex will draw on this for both Demag Crane’s on-going success and the future of Terex as a whole. We look forward to capitalising upon our strengths and working with Demag Cranes’ management and employees to continue to grow the business globally.”

Demag chief executive Aloysius Rauen commented that it was a good result for Demag shareholders and a good outcome to the offer.

In spite of the offer receiving a positive reaction from the Demag management the shares rose to a level slightly above the offer price, indicating that some buyers think there might be a last minute counterbid. The closing date of June 30th remains as does the requirement for at least 51 percent of Demag shareholders to accept the cash offer.

Vertikal Comment
This would seem to be a fair outcome to what at one point looked like becoming a very hostile takeover battle which would come to nothing. While the price is substantially higher than Terex said it was willing to pay, it knows that it is still a good deal.

An immediate benefit for Terex is the consolidation of its position in the marine crane sector which it only entered in 2009 when it acquired the troubled Fantuzzi business. The combination of Demag’s Gottwald port cranes with Fantuzzi’s offerings has all of the potential of being one of those rare deals where two plus two makes five.

Even more significantly perhaps will be the Terex entry into the industrial overhead crane business – a totally different market for the group which could benefit from a little construction equipment makers pizazz, while Terex could benefit from the technological and application led disciplines of the industrial lifting market.

All in all this could be a good deal for Terex. One point for the sentimental types is that the Demag crane brands separated when Terex acquired the Demag mobile crane business will be reunited.
See Demag looks set to reject Terex
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