Konecranes purchase of Terex’s MHPS final

In News by Alisa Evans

Konecranes, on May 16, 2016, signed an agreement to acquire from Terex Corporation its Material Handling & Port Solutions (MHPS) segment against consideration consisting of cash and shares and to terminate the previously announced business combination agreement.

On February 14, 2017 Terex completed the sale of 7.45 million Class A shares in Konecranes.

The acquisition of MHPS will improve Konecranes’ position as a focused global leader in the Industrial Lifting & Port Solutions market. Konecranes will achieve substantial growth opportunities in the service business as well as critical scale for further technological development.

Overview of Terex MHPS

Terex MHPS is a leading supplier of industrial cranes, crane components and services under the Demag brand, as well as port technology with a broad range of manual, semi-automated and automated solutions under several brands such as Gottwald. Customers use these products for lifting and material handling in manufacturing and at port and rail facilities. Terex MHPS has manufacturing operations in 16 countries on five continents and operates a sales and service network in more than 60 countries. It has a 50% interest in a Singapore-based joint venture that manufactures industrial cranes in eight locations around the world. Terex MHPS is one of the five segments of Terex Corporation.

According to unaudited special purpose carve-out financial information, sales of Terex MHPS (including Crane America Services) were USD 1,542 million (EUR 1,391 million) and the adjusted EBITDA was USD 111 million (EUR 100 million) in 2015. In 2015, Terex MHPS generated 31% of its sales from maintenance services and spare parts. It employs approximately 7,200 people of which approximately 1,700 are in aftermarket operations. (For further financial information, see Preliminary unaudited combined financial information, included in Appendix 2.)

Industrial Rationale

With the Acquisition, Konecranes will:

  • Add critical mass and scope to its global service organization
    • Enlarged combined installed base provides broader opportunities to offer service capabilities
    • Major earnings potential from digitalization of services
    • Combination of strong service networks and concepts creates critical mass to unlock the significant in-house service market
  • Reach scale benefits and synergies in industrial lifting
    • Optimization of manufacturing footprint enables necessary production cost savings
    • Scale benefits in sourcing
    • New manufacturing platform positions Konecranes for future market growth
  • Combine complementary Port segment technological and marketing capabilities into complete product offering to better compete in global markets
    • Ability to offer comprehensive port solutions to global customers
    • Highly complementary range of products
    • Enhances further strategic customer dialogue
  • Create a truly global footprint through the combination of complementary geographic presence
    • Konecranes’ presence in Northern Europe, North America and China vs. Terex MHPS’ presence in Germany, Southern Europe, South America and Southeast Asia improve ability to serve global customers
    • Critical mass in emerging markets
  • Create critical mass for future technology development
    • Industry-leading resources for continued technology development, including automation, software and digitalization
    • Technology leadership of increasingly critical importance
    • Significant scale benefits enhance R&D efficiency
    • Combination benefits from technology development heritage of both businesses
  • Leverage  IT infrastructure
    • Significant investments already made in IT infrastructure enable seamless integration
    • Continuous development and high scalability support future growth

Christoph Vitzthum, Chairman of the Board of Konecranes, said: “For Konecranes, this Acquisition is a milestone in building our future. The Acquisition makes it possible for us to realize a long list of synergies and we expect it to create substantial value for our customers and shareholders.”

Panu Routila, President and CEO of Konecranes, commented: “This Acquisition will prove crucial to improving our position as a global partner in services, industrial lifting and port solutions, and at the same time create significant value for our owners. The combination of our businesses brings together a family of leading brands that will provide an excellent platform for further sustained growth, opens new growth opportunities in the service business and creates critical mass for future technology development. Furthermore, the Acquisition allows us to combine the outstanding talent and best practices that each of Konecranes and MHPS have to offer. We already have extensive experience in maintaining Terex MHPS equipment, and are convinced that the complementary range of equipment and differences in geographical footprint will make Konecranes and MHPS an ideal match.”


Konecranes is prepared to deliver expected synergies on an accelerated timeline based on its in-depth review of the synergy opportunity and the extensive integration planning work carried out jointly with Terex over recent months. Of the total of EUR 140 million p.a. synergies targeted within three years, EUR 35 million is expected to be captured within 12 months from closing of the Acquisition. Overall, synergies will come from procurement, including supply chain optimization, insourcing/outsourcing and freight and logistics efficiency. Another significant contribution to synergies will be made from operations, including manufacturing footprint and capacity utilization. A third source of synergies will be SG&A, including broader SG&A efficiencies, IT system consolidation and engineering and R&D optimization. One-time implementation expenses are expected to be EUR 130 million, with EUR 60 million of capex expected.

In addition, dynamic synergies related to new opportunities in global service operations are expected to lead to significant earnings growth.