Kone Reportedly Seeks To Acquire thyssenkrupp's Elevator Business
January 28, 2020 at 02:10 pm EST
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KONE Oyj (HLSE:KNEBV) has offered about €17 billion ($18.9 billion) for thyssenkrupp AG (XTRA:TKA) elevator unit, the highest bid so far. Kone on January 28, 2020 said it had made a non-binding bid, a day after a deadline expired. The group said it saw a “highly complementary geographical footprint of the businesses, substantial value creation on offer from synergies, and joint innovation potential in an operating environment increasingly shaped by digitalization”.
Kone's offer represented a premium of about €1 billion over the best offer from leading competitors from the private equity world, according to a person familiar with the matter. “Offer size alone is not enough,” said labor leader Knut Giesler, Deputy Supervisory Board Chairman of thyssenkrupp's elevator unit and a member of the powerful IG Metall union. Workers fear that a sale to Kone could result in substantial job cuts.
“It has to be a safe deal, a safe transaction for the remaining part of thyssenkrupp and there have to be assurances for the employees of the elevator division,” Giesler added. He said all options had to be kept open on the unit, including a selling it to a strategic player, a private equity firm or listing on the stock exchange. Giesler confirmed Hitachi Ltd. (TSE:6501) also submitted a bid.
He said a buyer would likely be picked at the middle or the end of February. Other suitors for the elevator business include a consortium of Advent International Corporation and Cinven Limited and Abu Dhabi Investment Authority, which are working with RAG-Stiftung.
Hitachi specializes in manufacturing and marketing of electronic and industrial equipments. Net sales (including intragroup) break down by family of products and services as follows:
- social infrastructure and industrial systems (24.7%): elevators, escalators, industrial facilities, railway systems, power generation units, etc. The group also provides engineering and construction of nuclear, hydroelectric, and thermal power plants services;
- information and telecommunications products and services (20.1%): systems integration, cloud computing, software, servers, hard disks, PCs, ATMs, data communication base stations, payment terminals, etc.;
- materials and components (16.6%): semi-conductor materials, printed circuit cards, cables, copper and forged steel products, magnetic materials, organic and inorganic chemical products, etc.;
- construction equipment (10%) : hydraulic excavators, wheel loaders, mining equipment, etc.;
- automotive systems (9.4%): powertrain systems, control systems, etc.;
- electronic products (9.2%): fiber-optic components, screen tubes, testing and measurement equipment, medical equipment, equipment for manufacturing semiconductors, etc.;
- household appliances (4.7%): heating and air conditioning equipments, refrigerators, washing machines, etc.;
- other (5.3%): mainly transport, financial and logistical services.
Net sales are distributed geographically as follows: Japan (49.2%), Asia (21.3%), North America (12.7%), Europe (10.8%) and other (6%).
HITACHI, LTD. 
