Finnish engineering firm Konecranes and machinery maker Cargotec plan to combine in a merger of equals. The companies want to speed up innovation, increase savings, and help develop greener and more automated technologies. Whilst the companies wait for clearance from competition authorities in 2021, their shares go up.
Author Iva Danilovic | Copperberg
Photo: Konecranes
This October Konecranes KCRA.HE and Cargotec CGCBV.HE has signed a combination agreement and a merger plan. The future company positions itself as the global leader in sustainable material flow.
Rob Smith, the CEO of Konecranes comments: “The future company will be a global leader with its unparalleled product range, global service network, industry-leading intelligent technology and […] unwavering commitment to safety”.
Cargotec CEO Mika Vehvilainen adds: “Our combined R&D resources will enable us to accelerate innovation in automation, robotics, electrification, and digitalization”. Cargotec chairman and its largest shareowner Ilkka Herlin, confirms that now is the right time to help develop greener and more automated, greener technologies for customers:
“Sustainability has been high on Cargotec’s agenda since its foundation (…) Our customers are increasingly seeking green solutions and together we will have better opportunities to solve customers’ challenges. I believe this is an excellent value creation opportunity both from a business perspective and also shaping global trade for the better “.
Interestingly, Mr. Herlin’s family divested Konecranes from lift maker Kone back in 1994, and have regretted it. Now the merger brings Konecranes back to the previous owners.
Reuters reports that the new group will be chaired by Konecranes Chairman Christoph Vitzthum and a new chief executive will be nominated later. Meanwhile, Cargotec shares have gone up 25%, and Konecranes stock has been up around 17%.
The new company aims for an operating profit margin of more than 10% and expects annual cost savings of about 100 million euros within three years of completion of the deal.
Considering the combined market value of around 4.5 billion euros the deal has effects around the world. The transaction affects other markets, not just Finland, reminds Sanna Syrjälä, the director of merger control at the Finnish Competition and Consumer Authority.
