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Konecranes buys Terex unit for US$1.3b after merger dropped

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Konecranes Oyj plans to acquire a lifting-gear business from Terex Corp for about US$1.3 billion after the US cranemaker abandoned a full merger to pursue talks with Chinese suitor Zoomlion Heavy Industry Science & Technology Co to buy the rest of the company.

[NEW YORK] Konecranes Oyj plans to acquire a lifting-gear business from Terex Corp for about US$1.3 billion after the US cranemaker abandoned a full merger to pursue talks with Chinese suitor Zoomlion Heavy Industry Science & Technology Co to buy the rest of the company.

Konecranes will pay US$820 million in cash and 19.6 million in shares for its material handling and ports solutions business, Terex said in a statement on Monday.

The transaction marks the end of a full merger between Konecranes and Terex that's been in the works since August 2015. That deal was thrown in doubt when China's Zoomlion unexpectedly emerged as a rival suitor for Terex in January.

The bidding war escalated in March, when Terex said it will hold talks with the Chinese industrial machinery manufacturer after receiving an increased offer.

Terex will own about 25 per cent of Konecranes. The US company will continue to pursue discussions with Zoomlion, it said today.

Zoomlion is interested in buying the rest of Westport, Connecticut-based Terex, which includes construction equipment and rock crushing machines, and that transaction could face less risk of being rejected by US officials if it excludes the MHPS division.

The Chinese company would also have the option of still pursuing a full takeover of Terex, which could leave the Finnish firm empty-handed except for a US$37 million breakup fee.

The original Konecranes-Terex combination, which had an announced value of US$4.2 billion, according to data compiled by Bloomberg, was intended to counter a slowdown in demand for lifting gear and heightened competition from Chinese manufacturers by boosting global reach and cutting costs.

Zoomlion, which would gain Terex technology and international presence, raised its cash offer to US$31 a share in March. Terex would likely seek guarantees to address regulatory and completion risks in any agreement.

BLOOMBERG