Konecranes and Cargotec spike merger after UK watchdog blocks deal
Cranes manufacturer Konecranes and cargo machinery firm Cargotec have spiked their upcoming merger following intervention from the UK’s competition watchdog.
The Competition and Markets Authority (CMA) blocked the deal, on the basis that the Finnish duo selling off all overlapping businesses would fail to address the regulator’s concerns.
The deal, announced at the beginning of October 2020, was conditionally approved by the European Commission, which accepted the remedy offer the CMA rejected. The package would have seen Konecranes divest in its lift truck business and automation solutions.
China’s competition watchdog, the State Administration for Market Regulation, also gave the merger the green light, alongside regulators in nine other jurisdictions.
After mulling the decision to table an alternative remedy package, the company’s directors concluded that there was not a solution which would have both addressed the CMA’s concerns and have been in the “best interest” of shareholders.
Konecranes chairman Christoph Vitzthum said: “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.
“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 companies had booked around £105m in combined merger related and integration planning costs.
Cargotec chairman Ilkka Herlin added that the merger would have created “substantial value” for the entire industry by “improving sustainable material flow” amid stretched supply chains.
“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.”