Finnish lift maker KONE on Wednesday announced the acquisition of its German rival TKE in a giant share-and-cash deal valuing TKE at €29.4 billion.
The group formed by the merger will be nearly twice the size of the current KONE group, with more than 100,000 employees in over 100 countries and an annual revenue of around €20.5bn, the two companies said in a statement.
A consortium including the private equity groups Advent and Cinven owns TKE.
The new group will be based in Finland and led by KONE’s current French chief executive, Philippe Delorme.
“This industry-revitalising transaction brings together two exceptional global businesses with highly complementary geographic footprints and innovation platforms,” the joint statement said.
The acquisition makes KONE gain strong access to markets in the Americas and to profitable service and maintenance contracts.
“KONE’s presence in Asia is complemented by TKE’s footprint in the Americas, and TKE opens new geographies for KONE, resulting in a well-balanced global presence.”
The takeover is the largest corporate acquisition ever carried out in Finland, according to Finnish media.
The consortium that owns TKE will receive €5bn and 270 million shares in the new KONE, valued at €15.2bn, and will hold 33.8% of the new entity, according to the statement.
The two groups expect annual synergies in the form of extra profit or cost savings of €700 million from the acquisition. The new company is expected to have a strong investment-grade credit rating while generating strong cash flow.
The deal still needs regulatory and shareholder approval and will likely finish in 2027.