China’s Zoomlion Heavy Industry Science & Technology Co. has issued a statement announcing that it decided to end the talks over its proposed $3.3bn acquisition of USA-headquartered crane and construction equipment manufacturer Terex Corporation.
It was previously reported that Terex has asked Zoomlion to sweeten its $3.3bn offer given the disruption to it plannned merger agreement with Finland’s Konecranes.
However, the negotiations were Zoomlion were thrown sharply into doubt when Terex announced the sales its industrial cranes division to Konecranes for $1.4bn this month.
The Chinese construction equipment manufacturer said in its statement, “although the parties to the transaction have made their joint efforts to closely negotiate on the proposed transaction recently, no agreement can be reached on the crucial terms. The company therefore decided to terminate the negotiation in relation to the proposed acquisition of Terex.”
The statement went on to say that Zoomlion “will continue to seek strategic opportunities for its long-term development, and further procure its strategic transformation and industrial upgrading.”
Another possible reason for the stalling of the negotiations is Zoomlion’s Q1 results report, which revealed a poorer than expected performance and cast doubt of the Chinese giant’s financial health.
According to an explanation given to the Wall Street Journal by people familiar with the deal, China Development Bank had been expected to lead the financing, but hadn’t yet provided a commitment letter to Zoomlion.
Whatever the reason, shares in the Connecticut-based Terex Corporation fell by 14% to $20.89 on Friday in the wake of the deal’s collapse — for which the two parties offered differing accounts.
Zoomlion’s withdrawal clears the way for Konecranes to buy Terex’s material handling and port solutions business.
Konecranes CEO Panu Ruotila commented that he is confident the deal—which gives the U.S. company a 25% stake in its Finnish partner—will secure antitrust approval and close later this year.
