Finnish engineering majors Konecranes and Cargotec have signed a combination agreement and a plan to combine the two companies through a merger.
The proposed combination will be implemented as a statutory absorption merger whereby Konecranes will be merged into Cargotec.
Upon completion of the merger, Konecranes and Cargotec shareholders would each own approximately 50 percent of the shares and votes of the future company.
The new company aims to achieve a comparable operating profit in excess of 10 percent, supported by synergies expected to be approximately € 100 million annually and fully realized in the first 3 years from the completion.
As informed, combined annual sales are about €7 billion, while operating profit would have been approximately €565 million based on the 2019 fiscal year.
Reuters reported that Cargotec shares jumped around 25%, while Konecranes stock was up around 17% following the announcement, giving a combined market value of around $5.3 billion.
”The combination of Konecranes and Cargotec, with their iconic technology brands, innovation capabilities, talented people and focus on sustainability, will create a company that is clearly greater than the sum of its parts, delivering robust synergies and creating a unique platform for shareholder value creation,” Konecranes Chairman, Christoph Vitzthum , said.
“Sustainability has been high on Cargotec’s agenda since its foundation and this merger enables us to become a global leader in sustainable material flow,” Cargotec Chairman, Ilkka Herlin , said.
“ Our customers are increasingly seeking green solutions and together we will have better opportunities to solve customers’ challenges. I believe this is an excellent value creation opportunity both from a business perspective and also shaping global trade for the better.
Completion is expected in the fourth quarter of 2021, and is subject to all copetition authority and other customary approvals.