Konecranes has signed an agreement to acquire the 50% stake in its MHE-Demag joint venture held by partner Jebsen & Jessen for approximately EUR147 million (USD163 million). The acquisition will significantly improve Konecranes' market position in the fast-growing South East Asian markets, creating further opportunities for service sales and simplifying the distribution channel for industrial cranes and components.
The transaction will allow Konecranes to fully consolidate MHE-Demag going forward. Konecranes estimates that the transaction will add approximately EUR150-180 million (USD166-200 million) in annual sales by 2022.
Konecranes is currently reporting MHE-Demag as an associated company. In 2018, the net result in the Group attributable to MHE-Demag was approximately EUR5 million (USD5.5 million).
"With the MHPS acquisition now behind us, Konecranes is ready to take the next steps on its growth path. This acquisition underlines our intent to pursue profitable growth, and meaningfully expands our footprint in a strategically important region with several fast-growing markets. The acquisition will also bring greater balance to Konecranes' regional sales structure," says Teo Ottola, interim CEO and CFO of Konecranes.
Jebsen & Jessen will receive approximately EUR147 million (USD163 million) in cash and deferred payments upon the expected closing of the deal on 2 January 2020. MHE-Demag is expected to have a minor net cash position at closing. The acquisition is expected to close without the need for regulatory approvals.
MHE-Demag is a leading supplier of industrial cranes and services in South East Asia under the MHE and Demag brands, and engineers, manufactures and maintains a comprehensive range of industrial cranes and hoists. Its customised solutions serve a wide range of industries and customers from general manufacturing to aerospace. MHE-Demag also provides warehousing equipment such as forklifts and dock levelers, aerial work platforms, building maintenance units and compact construction equipment, as well as automated car parking systems.
Service represents approximately 50% of MHE-Demag's annual net sales, with cranes and components at approximately 35% and other industrial products at approximately 15%.
MHE-Demag has approximately 1,800 employees, including some 700 service engineers. MHE-Demag operates 11 factories and more than 70 service locations throughout South East Asia and is headquartered in Singapore.