Equipment merger off

Cargotec and Konecranes have cancelled their planned merger after The UK Competition & Markets Authority (CMA) blocked clearance.

According to the CMA’s final report issued, the remedies – which would have removed all overlapping businesses of the two companies and were accepted by the European Commission, would not be effective in addressing the CMA’s concerns.

”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,” said Ilkka Herlin, chairman, Cargotec.

”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.”

Merger off

The completion of the planned merger first announced in 2020 required approvals from all relevant competition authorities. 

Cargotec and Konecranes had already obtained clearances for the planned merger from numerous competition authorities. In 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, comprising commitments to divest Konecranes Lift Truck business and Kalmar Automation Solutions. 

But completion of the merger remained subject to further approvals from various other competition authorities, including the UK CMA and the US Department of Justice (DOJ). 

In response to feedback received from the CMA during the course of their investigations, the boards of directors of Cargotec and Konecranes said they 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 of both companies 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.

Both Cargotec and Konecranes said they will now move forward and continue to operate separately as fully independent companies focusing on their own ’value creation’ opportunities.

But both have been left out of pocket by the failed merger. By the end of 2021, Konecranes had booked €56 million and Cargotec €57 million of merger related transaction and integration planning costs.