Konecranes and Cargotec are to merge to create a Future Company which will have an annual combined sales of around €7 billion ($8.2 billion).
The planned date for completion of the merger is set for 2022, subject to approval from shareholders and appliance with the necessary Finnish legal obligations.
A statement explains that the rationale of the merge is to create a global leader in sustainable material flow, with numerous valuable customer-facing brands and complementary offerings across its businesses in industries, factories, ports, terminals, road and sea-cargo handling.
Ilkka Herlin, Chairman, Cargotec, added: “Sustainability has been high on Cargotec’s agenda since its foundation and this merger enables us to become a global leader in sustainable material flow. Our customers are increasingly seeking green solutions and together we will have better opportunities to solve customers’ challenges. I believe this is an excellent value creation opportunity both from a business perspective and also shaping global trade for the better. The Future Company will be well-positioned to utilise these opportunities and create strong value for its customers, employees and shareholders.“
Cargotec, which specializes in cargo-flow equipment at ports and terminals, saw sales totaling €3.7 billion in 2019. Meanwhile, Konecranes saw €3.3billion in group sales in 2019.
Christoph Vitzthum, Chairman, Konecranes said: ”The combination of Konecranes and Cargotec, with their iconic technology brands, innovation capabilities, talented people and focus on sustainability, will create a company that is clearly greater than the sum of its parts, delivering robust synergies and creating a unique platform for shareholder value creation.
“Customers will benefit from the companies’ combined technologies and even better service capabilities. This is a pivotal moment for Finnish industry and the material handling industry as a whole, and we are fully ready and committed to seize this historic opportunity.”
The preliminary financial targets of the Future Company will be above-market sales growth, an initial comparable operating profit in excess of 10%, and gearing below 50% which can temporarily be higher.
The Future Company will rely on the skills of both companies and the combination will deliver benefits to all stakeholders. It aims to be a leader in sustainable material flow through its vision based on decarbonisation, safety, productivity and efficiency as well as maximizing the lifetime value of the equipment and solutions of its customers.