Zoomlion announced Tuesday that on Dec. 4 it offered to buy Terex for $30 per share in cash. At the time of the offer, it represented a 41 percent premium over Terex’s then most recent closing price of $21.22.
Zoomlion, whose sales are restricted mainly to China, says buying Terex, whose business is primarily bolstered by aerial work platforms and cranes, will allow it to generate additional revenue through sales in the U.S. and European markets. Zoomlion adds that it values Terex’s “advanced manufacturing knowhow and technology”.
The Chinese company regards Terex as having a “similar corporate culture” as well and praised the Terex management team as “excellent”.
On Tuesday Terex announced sales fell 12 percent during the fourth quarter to $1.6 billion while profit fell 28 percent to $51 million. Full-year 2015 sales fell 11 percent to $6.5 billion while profit fell 16 percent to $355 million.
There are a couple of problems with Zoomlion’s proposed deal, however.
Most notably is Terex’s intention to merge with Konecranes. That all-share deal was announced by both companies in August 2015. In fact, the announcement mentioned expectations of $10 billion in annual revenues and listed the primary benefit of the deal as allowing the companies to fight off “low-cost emerging market players,” such as Chinese manufacturers, with enhanced scale.
