CARGOTEC CORPORATION, INSIDE INFORMATION, 29 MARCH 2022 AT 9:55 AM EEST
The UK CMA blocks the merger between Cargotec and Konecranes and thus the Companies have Jointly Decided to Cancel the Planned Merger
The UK Competition & Markets Authority (“CMA”) has blocked the merger between Cargotec and Konecranes. According to the CMA’s final report issued today, the remedies - which would have removed all overlapping businesses of the two companies and were accepted by the European Commission (“EC”) - would not be effective in addressing the CMA’s concerns and thus the planned merger between Cargotec and Konecranes cannot be completed. The completion of the planned merger would have required approvals from all relevant competition authorities. Thus, Cargotec and Konecranes have today decided to cancel the planned merger.
Cargotec and Konecranes have obtained clearances for the planned merger from numerous competition authorities. As announced on February 24, 2022, the EC conditionally approved the planned merger between Cargotec and Konecranes on the basis of the same remedy package rejected by the CMA, which comprised commitments to divest Konecranes Lift Truck business and Kalmar Automation Solutions. In addition, the State Administration for Market Regulation (the competition authority in China) and nine other jurisdictions have approved the planned merger.
In addition to the clearances of the above competition authorities, completion of the merger remained subject to further approvals from various other competition authorities, including the Department of Justice (“DOJ”) in the United States, with whom Cargotec and Konecranes have been in continuous dialogue.
In response to feedback received from the CMA during the course of their investigations, the boards of directors of Cargotec and Konecranes carefully considered amending the remedy package offered to the EC further, as well as offering alternative remedy packages to address the concerns raised by the CMA. The boards of directors did not, however, find any satisfactory solution which would have addressed the concerns of the CMA and which would have been in the best interest of the shareholders of Cargotec and Konecranes, and of the combined company, without jeopardising the rationale of the proposed merger as presented on 1 October 2020.
As a consequence of the CMA’s negative final report, the boards of directors Cargotec and Konecranes have therefore concluded that it is in the best interest of each of Cargotec and Konecranes and their respective shareholders that the merger is cancelled.
Ilkka Herlin, the Chairman of Cargotec stated: 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. 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.
Christoph Vitzthum, the Chairman of Konecranes stated: The combination of Konecranes and Cargotec, as planned and announced on 1 October 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. 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.
Cargotec and Konecranes will immediately cease the pursuit of the merger and the related processes and continue to operate separately as fully independent companies.
By the end of 2021, Konecranes had booked EUR 56 million and Cargotec EUR 57 million of merger related transaction and integration planning costs. The total transaction cost estimate of EUR 125 million (excluding integration planning costs) remains valid. The final transaction and integration planning costs will be reported when available.
The Board of Directors
For further information, please contact:
Carina Geber-Teir, SVP Communications, tel. +358 40 5024 697
Aki Vesikallio, Director, Investor Relations, tel. +358 40 729 1670
The Merger and the merger consideration securities have not been and will not be registered under the U.S. Securities Act of 1933 (the “Securities Act”), and may not be offered, sold or delivered within or into the United States, except pursuant to an applicable exemption of, or in a transaction not subject to, the Securities Act.
The information in this release is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of, or located in, the United States or any other locality, state, country or other jurisdiction where such distribution or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction and it does not constitute an offer of or an invitation by or on behalf of, Cargotec, or any other person, to purchase or sell any securities.
The information in this release contains forward-looking statements, which are information on Cargotec’s current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “estimate,” “plan,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond Cargotec’s control that could cause Cargotec’s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Cargotec’s present and future business strategies and the environment in which it will operate in the future.
Cargotec (Nasdaq Helsinki: CGCBV) enables smarter cargo flow for a better everyday with its leading cargo handling solutions and services. Cargotec's business areas Kalmar, Hiab and MacGregor are pioneers in their fields. Through their unique position in ports, at sea and on roads, they optimise global cargo flows and create sustainable customer value. Cargotec has signed United Nations Global Compact Business Ambition for 1.5°C. The company's sales in 2020 totalled approximately EUR 3.3 billion and it employs around 11,000 people.