UK regulator blocks $5B Cargotec-Konecranes merger
Following a decision by the UK Competition & Markets Authority (CMA) to block the merger between Finnish engineering majors Cargotec and Konecranes, the duo has decided to cancel the planned business combination.
“Following an in-depth Phase 2 investigation, … CMA found that the merger would harm competition in the supply of a wide range of container handling equipment products,” the UK competition regulator explained.
With this decision, CMA wants “to ensure that competition in the UK is protected”.
According to the CMA’s final report issued on 29 March, the remedies — which would have removed all overlapping businesses of the two companies and that 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 (29 March) decided to cancel the planned merger,” the two companies said in a statement.
Cargotec and Konecranes have obtained clearances for the planned merger from numerous competition authorities. As announced on 24 February 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 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.
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.
“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,” Ilkka Herlin, the Chairman of Cargotec, said.
“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… Konecranes Board of Directors is disappointed that the remedy package offered did not satisfy the concerns of all regulators… Konecranes will continue to drive its strategy and pursue value-creation potential on a stand-alone basis,” Christoph Vitzthum, the Chairman of Konecranes, stated.
Cargotec and Konecranes both offer a range of container handling equipment and services to port terminals and other industrial customers worldwide. The two companies announced an agreement to merge in a $5 billion deal in October 2020.
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