Crane maker Terex, based in Westport, is merging with Finnish rival Konecranes in an all-stock deal that creates a company with a combined $10 billion in 2014 revenue.
The new company will be called Konecranes Terex PLC and have “significant” headquarters in Westport and Finland.
The companies described the transaction as a merger of equals. Terex Corp. shareholders will own about 60 percent of the combined company, with Konecranes stockholders owning approximately 40 percent.
Terex CEO Ron DeFeo will serve in that role for the combined business, with Konecranes Chairman Stig Gustavson serving in that post.
The alliance is a response to a slowdown in demand for lifting gear and heightened competition from Chinese manufacturers, which have increased capacity and are looking further afield for contracts amid the prospect of slowing domestic markets. The companies have highlighted $121 million in annual savings as they combine their operations.
“The combined company will benefit from increased scale as the industry has become more competitive over the last decade with low-cost emerging market players entering the scene,” Stephen Volkmann, an analyst at Jefferies, wrote in a report Tuesday.
Terex already played an active role in consolidation in the industry when it bought Demag Cranes of Germany in 2011.
The combined company’s board will include five Terex directors and four Konecranes directors. The transaction, which still needs approval from both companies’ shareholders, is expected to close in the first half of next year.
By moving Terex out of the United States, the combination may bring tax benefits. The corporate tax rate in Finland is 20 percent, while in the U.S. it’s 35 percent. Still, in practice it’s more complicated: Konecranes paid tax at an effective rate of 31.5 percent in the first half of the year, while Terex’s tax rate was 27.7 percent in the second quarter.
The Finnish company had revenue of about 2 billion euros, or $2.2 billion, compared with Terex’s $7.3 billion, and about 12,000 employees in almost 50 countries, according to its website.
Terex stockholders will receive 0.8 of a Konecranes share for each of their shares, the companies said in statements Tuesday. That values Terex at about $30.19 a share, based on Monday’s closing price for Konecranes.
Terex shares were up $4.95 to $26.78 Tuesday on the New York Stock Exchange. Shares are down from a 52-week high of $37.64 in mid-August, 2014.
Reports from Associated Press and Bloomberg News included.
