Cargotec–Konecranes merger abandoned
29 March 2022
Crane manufacturers Cargotec and Konecranes have cancelled their planned merger with immediate effect.
The announcement to abandon the plans to merge two of the world’s largest crane companies was made today (29 March) as a result of the UK Competition & Markets Authority putting a block on the deal, Cargotec said.
The news comes soon after The European Commission’s conditional approval given on 24 February (ICST March 2022, page 11). It agreed the merger on the basis that Konecranes would sell its Lift Truck business and Cargotec its Kalmar Automation Solutions unit. Cargotec said this “would have removed all overlapping businesses of the two companies.”
CMA’s final report issued on 29 March said the proposed remedies would not be effective in addressing the CMA’s concerns and thus the planned merger between Cargotec and Konecranes cannot be completed.
For the deal to go ahead approvals are needed from all relevant competition authorities. Clearances were granted by numerous competition authorities, Cargotec said, including the same remedy package approved by the EC but rejected by CMA. Others clearing the merger included the State Administration for Market Regulation in China and nine other jurisdictions, Cargotec said.
The deal remained subject to approvals from other competition authorities, including the Department of Justice in the United States.
Cargotec reported that by the end of 2021 it had booked €57 million in merger-related transaction and integration planning costs while Konecranes had booked €56 million.
Ilkka Herlin, Cargotec chairman said, “The Board of Cargotec is convinced that the merger would have created substantial value for the entire industry as well as shareholders by improving sustainable material flow. The combination would have created a strong European company enabling accelerated shared abilities to innovate without harming competition. We have done all we could to realise the merger and are disappointed that our plans have had to be abandoned. After a long and extensive regulatory review process and merger planning preparations it is time to shift our full focus on executing Cargotec’s own strategy and value-creation opportunities.”
For Konecranes, Christoph Vitzthum, chairman commented, “The combination of Konecranes and Cargotec, as planned and announced on 1 October 2020, would have created a company that would have been greater than the sum of its parts. The merger control process has been extensive and the investigations thorough, and Konecranes Board of Directors is disappointed that the remedy package offered did not satisfy the concerns of all regulators. At the same time, we believe that further remedies would have not been in the best interest of Konecranes’ shareholders as they would have changed the strategic rationale of the transaction. Konecranes will continue to drive its strategy and pursue value-creation potential on a stand-alone basis.