Shares of Terex Corp. (NYSE: TEX) tumbled in Friday’s session following the announcement that its talks with Zoomlion were terminated. At the same time, the company also announced that the sale of its Material Handling and Port Solutions business (MHPS) to Konecranes will proceed.
The sale of MHPS to Konecranes for roughly $1.3 billion is subject to shareholder and regulatory approvals. The sale is expected to close in January 2017.
Management intends to use the net proceeds from the sale to significantly reduce Terex’s debt levels and improve its balance sheet, providing it with the ability to buy back shares and invest in remaining businesses.
As a 25% shareholder of Konecranes, Terex will be able to share in the synergies and economic upside of the combined MHPS and Konecranes businesses.
David A. Sachs, Terex chairman, commented:
The Board of Directors and Management of Terex worked diligently to determine if an appropriate transaction with Zoomlion, beneficial to Terex shareholders, was achievable. Unfortunately, after many months of discussions, Zoomlion was unable to provide a fully financed, binding proposal for the purchase of Terex with or without MHPS. This ends the prolonged period of uncertainty that this process has brought to Terex and its customers, team members and shareholders. The Board is confident in our global management team and with Terex’s prospects for the future.
John L. Garrison, president and CEO of Terex, added:
The sale of the MHPS business to Konecranes will now proceed. This transaction represents excellent value realization for our shareholders and also provides certainty for our MHPS customers and team members. We expect this sale to be accretive to Terex’s earnings per share.
Shares of Terex traded down about 17% to $20.20 Friday morning, with a consensus analyst price target of $25.52 and a 52-week trading range of $13.62 to $27.11.
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