17.02.2016

Zoomlion confirms Terex bid

Chinese crane and equipment manufacturer Zoomlion has confirmed its $3.3 billion bid for Terex this morning.

It said that 40 percent of deal will be financed with 1.3 billion from its own cash reserves, while taking on an additional $2 billion of debt to cover the other 60 percent.

The $30 a share offers was double the share price at the time, and is still 40 percent higher than the latest closing price.

In the announcement the company also said that it was confident the deal would receive regulatory approvals and added: “We believe that this proposed transaction offers strategic benefits to both companies... after the completion of the proposed transactions, the company and its subsidiaries will feature a more comprehensive product chain and wider product coverage”.

Zoomlion is already heavily indebted, having increased its leverage substantially in recent years and expects profits for 2015 to be substantially lower than in 2014. However it is buoyed up by the Chinese government’s encouragement for companies to make overseas acquisitions hinting that it would come to their aid if they have difficulty repaying the debt.

Terex has said that it is looking at the offers, but has no intention at this stage to change its current recommendation to accept the Konecranes merger deal