The boards of directors of Cargotec and Konecranes have called off their planned merger.

This follows the decision by the UK Competition & Markets Authority to block the merger between the materials handling giants. 

The CMA found that “the anticipated merger between Cargotec Corporation and Konecranes Plc may be expected to result in a substantial lessening of competition, as a

result of horizontal unilateral effects in the supply of each of the following categories of equipment in Europe, including the UK (Europe):

(a) rubber-tyred gantry cranes (RTG);

(b) automated stacking cranes (ASC);

(c) shuttle carriers (ShC) and straddle carriers (SC);

(d) empty container handlers (ECH);

(e) heavy duty forklift trucks (HDFLT);

(f) reach stackers (RS); and

(g) automated terminal tractors (ATT)”.

According to the CMA’s final report, 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 and thus the planned merger between Cargotec and Konecranes cannot be completed. 

A joint statement from the two companies says the completion of the planned merger would have required approvals from all relevant competition authorities.

“Thus, Cargotec and Konecranes have today decided to cancel the planned merger,” directors say.

“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.”

Ilkka Herlin, chairman of Cargotec, says: “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. 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. 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.”

Konecranes chairman Christoph Vitzthum agrees: “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. The merger control process has been extensive and the investigations thorough, and Konecranes’ Board of Directors is disappointed that the remedy package offered did not satisfy the concerns of all regulators. “At the same time, we believe that further remedies would have not been in the best interest of Konecranes’ shareholders as they would have changed the strategic rationale of the transaction. Konecranes will continue to drive its strategy and pursue value-creation potential on a stand-alone basis.”

Cargotec and Konecranes will immediately cease the pursuit of the merger and the related processes and continue to operate separately as fully independent companies.

In breaking news, Cargotec has revealed a "refocus (of) the strategic direction of the company for higher financial performance".

"Cargotec will focus on sustainability and growth in profitable core businesses Hiab, Kalmar Mobile Solutions and Kalmar’s horizontal transportation business," according to a statement.

Cargotec will initiate an evaluation of strategic options of MacGregor including a potential sale of the business. The evaluation covers the whole business area inclusive of its merchant, offshore and services businesses. The group will also shift Kalmar’s focus towards mobile solutions and will start planning an exit from the heavy port cranes business.