Cargotec and Konecranes cancel their planned merger
March 29, 2022 By Crane & Hoist Canada staff
The UK Competition & Markets Authority (CMA) has blocked the proposed merger between Cargotec and Konecranes.
To alleviate concerns, Cargotec and Konecranes planned to remove all overlapping businesses of the two companies, a remedy that was accepted by the European Commission (EC).
However, according to the CMA’s final report, the remedies would not be effective in addressing the authority’s concerns.
The completion of the merger would have required approvals from all relevant competition authorities. Without CMA approval, Cargotec and Konecranes have decided to cancel the merger.
“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,” said Cargotec Chairman Ilkka Herlin.
“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.”
Cargotec and Konecranes to continue independent operation
Now, Cargotec and Konecranes will immediately cease the pursuit of the merger and the related processes and continue to operate separately as fully independent companies.
“The combination of Konecranes and Cargotec, as planned and announced on Oct. 1, 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,” said Konecranes Chairman Christoph Vitzthum.
“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.”
The merger obtained clearances from numerous competition authorities. As announced on February 24, the EC conditionally approved the planned merger between Cargotec and Konecranes based on the same remedy package rejected by the CMA, which included commitments to divest Konecranes Lift Truck business and Kalmar Automation Solutions.
In response to feedback received from the CMA during their investigations, the boards of directors of Cargotec and Konecranes considered amending the remedy package offered to the EC, as well as offering alternative remedy packages to address the concerns raised by the CMA. However, the boards were unable to find a solution that would not jeopardise the rationale of the proposed merger.
By the end of 2021, Konecranes had booked EUR$56 million and Cargotec EUR$57 million of merger related transaction and integration planning costs.
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