The UK Competition & Markets Authority (CMA) has blocked the merger between Cargotec and Konecranes.
According to the CMA’s final report issued on 29th March, the remedies – which would have removed all overlapping businesses of the two companies and were accepted by the EC – would not be effective in addressing the CMA’s concerns and therefore the planned merger between Cargotec and Konecranes cannot be completed. The completion of the planned merger would have required approvals from all relevant competition authorities. Therefore, Cargotec and Konecranes decided to cancel the planned merger.
Cargotec and Konecranes had obtained clearances for the planned merger from numerous competition authorities. As announced on 24th February 2022, the EC conditionally approved the planned merger between the two companies on the basis of the same remedy package rejected by the CMA, which comprised commitments to divest Konecranes Lift Truck business and Kalmar Automation Solutions. In addition, the State Administration for Market Regulation (the competition authority in China) and nine other jurisdictions approved the planned merger.
In addition to the clearances of the above competition authorities, completion of the merger remained subject to further approvals from various other competition authorities, including the Department of Justice (DOJ) in the USA, with whom Cargotec and Konecranes have been in continuous dialogue.
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 1st October 2020.
“We have done all we could to realise the merger and are disappointed that our plans have had to be abandoned,” commented Ilkka Herlin, the Chairman of Cargotec. “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.”
Christoph Vitzthum, the Chairman of Konecranes, was equally subdued. “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,” he added. “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 standalone basis.”