Finnish cargo handling equipment specialists Konecranes and Cargotec have decided not to move forward with their planned merger after the UK Competition and Markets Authority (CMA) blocked the transaction, citing “substantial competition concerns”.
The CMA said its probe had found that the merger would harm competition in the supply of a wide range of container handling equipment products. “Within these markets, the CMA’s investigation found that Cargotec and Konecranes are competing closely for business in the UK, and that UK customers would have few remaining alternative suppliers after the merger.”
“While the merging businesses suggested that there would be an increased competitive threat from Chinese suppliers across all markets in future, the CMA found that this would not be sufficient to prevent the significant loss of competition that the merger of two key established suppliers would bring about.
“This loss of competition could have serious consequences for UK port terminals and other customers, including higher prices and lower quality products and services across a wide range of container handling products,” the UK competition watchdog said in a statement.
Cargotec and Konecranes announced an agreement to merge in a $5bn deal in October 2020. The two companies have obtained clearances for the planned merger from numerous competition authorities, including the European Commission, the Chinese competition authority and nine other jurisdictions. Completion of the merger remained subject to further approvals from various other competition authorities, including the US Department of Justice.
“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,” stated Ilkka Herlin, the chairman of Cargotec.
“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,” added Christoph Vitzthum, the chairman of Konecranes.
The two companies said they would immediately cease the pursuit of the merger and the related processes and continue to operate separately. By the end of 2021, Konecranes had booked $62m and Cargotec $63m of merger-related transaction and integration planning costs.